Pakistan needs to change energy system

Pakistan is almost half a century behind the world in transforming its energy sales from a state-controlled pricing mechanism to a market-based competitive pricing system, which is a must to make energy supply cheaper and affordable for the nation.

Energy - power, oil, gas and coal - producers and importers will have to change their mindset. They have to forget the state guarantees for energy production and sales to the citizens.

These remarks were made by Special Assistant to Prime Minister (SAPM) on Petroleum Nadeem Babar during a conference on Wednesday.

The world is moving towards clean energy. Pakistan, which is a low carbon-producing country, has rightly started digging out coal from one of the world’s largest reserves in Tharparkar, Sindh.

Later, the country may deploy technology to transform coal into clean gas and coal into liquid (diesel) for electricity generation and move along with the world shoulder to shoulder.

“We produce low carbon … it was important for us to open Thar coal and we did. That was the right decision and we should stand and proudly say yes this was the right decision. And now look at what technology offers us,” Babar added, while addressing the “Stakeholders Consultative Conference on Policy Framework for Coal to Gas/Liquids Engineering Projects”.

He said that as an individual, as a corporate entity, as an investor, as policymakers and other stakeholders like multinational companies (MNCs), “if we do not change our mindset and realise that we have to move our policy and business structures with the time and open them … frankly we may find ourselves completely isolated in two or three decades”.

Also speaking on the occasion, Sindh Minister for Energy Imtiaz Ahmed Sheikh said, “Pakistan spends almost $16 billion on energy imports in a year (which comes to around 40% of total imports) despite having resources in the country. Thar coal may help the country reduce its reliance on expensive imports of energy.”

Babar said that today 45-50% of the world electricity consumed has transformed from being a monopoly of controlled service to a traded commodity. Over 45-50% electricity in the world is sold as a commodity rather than as a monopoly service, he added.

“This number will keep growing,” he said, adding, “Hardly, 50 years ago, 100% electricity sold in the world was based on monopoly service. And within a 50-year period, roughly half of it has been commoditised.”

The world is moving towards clean energy and many nations have made the claim that by 2050 they will be predominantly based on clean energy usage. The world was producing almost 42% power from coal some 10 years ago. Today, that number has dropped to mid-30s, and it is quite likely that by 2050 this number, if it may not go to zero, will be somewhere in the single digit.

He said that there was a need to let the private sector move forward and provide it a regulatory and fiscal framework for investment, in this regard. The world has moved away from structured-controlled commodity to market-based commodity, he said, adding, “There is no reason why we cannot do the same.”

Sheikh added that Thar coal is a guarantee of meeting the energy needs of the nation on the condition that a comprehensive and long-term plan be made for the utilisation of this great resource provided by nature for various purposes and that a policy be formulated in the light of expert opinion in this regard.

“By converting the coal reserves of Thar into gas and liquid (diesel) the cost of import of energies can be saved.” He said that the federation must take care of Sindh’s constitutional rights. Sindh produces more than 2,400 mmcfd gas. Out of this, the province hardly gets 900 mmcfd. “According to Article 158 of the Constitution, we have the first right to the gas produced in Sindh.”

He said the federal and provincial governments can overcome energy problems in the country through working together.

Sheikh said that 660MW of electricity generated from Thar coal is being supplied to the national grid daily and an additional 660MW will be added to this supply by the end of next year.

Published in The Express Tribune, March 11^th, 2021.

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