Crippled with an overwhelming energy crisis, Pakistan is increasing its dependence on oil and gas, especially on imported LNG. The circular debt, currently standing at a colossal Rs2.3 trillion, is all set to cross Rs2.6 trillion by the end of the ongoing fiscal year. Reportedly, Rs1 trillion is owed by Sui Southern Gas Company Ltd (SSGCL) and Sui Northern Gas Pipelines Ltd (SNGPL) to Oil & Gas Development Company Ltd (OGDCL) and Pakistan Petroleum Ltd (PPL) which are the mainstay of oil and gas exploration and production in Pakistan. This cheap indigenous source of energy is almost half the price of imported LNG, the use of which is increasing in Pakistan. This is placing a heavy financial burden on our limited foreign exchange reserves and holding back OGDCL and PPL from venturing in new areas as their revenues are stuck in the vicious circular debt. In the wake of depleting oil and gas reserves, no fresh investment in exploratory activities is alarming and does not augur well for the country.
New discoveries in the country are planned in inhospitable areas, requiring extra outlays on security and logistics. The offshore option is further challenging and capital-intensive. Keeping OGDCL cash starved by Rs600 billion and PPL by Rs400 billion is in fact marginalising the local exploratory activities that will cause an irreversible damage of humongous proportion in the long run. Moreover, a comprehensive petroleum policy encompassing present day requirements is needed to attract foreign investors. The fact is that most foreign oil and gas exploration and production companies have left Pakistan in the last decade or so which is reflective of something rotten in our petroleum policies and regulatory regime.
As the light at the end of the tunnel is rapidly fading, we must find urgent solutions to rescue ourselves from the looming disaster. There is no talisman to achieve an overnight transformation but some doable options are available to set the energy policy right. Once properly formulated and implemented, any government in power should own it like the nuclear programme. Pakistan has miserably failed in utilising its huge coal reserves as Dr Samar Mubarakmand has wasted both time and money without achieving gasification from Thar coal reserves. We, therefore, need to collaborate with reputable multinational companies to meet this objective befittingly. There is also a pressing need for increasing the share of cheaper energy sources like hydel, biomass, solar and wind in our energy mix which is heavily tilted towards imported fuels. The perennial issue of circular debt must be addressed from its root cause. The electricity theft and line losses are main factors. A political will and writ of the government are required in bringing a paradigm shift towards increasing efficiency, reducing the magnitude of theft/corruption and making electricity affordable for the masses. Similarly, the use of hybrid/electric vehicles and other fuel-efficient equipment and appliances including solar street lights and similar applications must be encouraged. The Directorate General of Petroleum Concessions being a regulatory government institution must be staffed by competent people and revamped as a regulatory body.
All state-owned enterprises in the power and petroleum sectors must hire highly qualified professionals based on merit. Likewise, their board of directors should comprise the best independent industry brains free of political and bureaucratic interference. Furthermore, the retirement age of these professionals needs to be extended beyond 60 years because this is when they are full of experience.
Finally, all commercial activities of state-owned enterprises should be taken out from the purview of the National Accountability Bureau so professionals can work fearlessly towards achieving their targeted goals. The ministry of energy has to come out from its brow beating mode and work in tandem with all commercial institutions purely in a supportive role.