Energy Sector Still in Disarray | Farhat Ali

It is now over two years that the government is struggling to define and structure a realistic roadmap to resolve the energy crisis. The state of energy sector governance continues to be confused and much in disarray. There is still no defined and considered strategy on the energy mix. We are aimlessly oscillating between coal, LNG, fuel oil, renewable and similar in the absence of an integrated energy strategy. Much of the happening is ad hoc and each fuel tossed around in isolation much riddled with politics, poor governance and lack of competence. To top it up, as a consequence to the 18th Amendment, the provinces have their own energy agendas not much synchronised with the centre nor among themselves.

It is reported that the Petroleum Ministry, much checkmated to move on, is now considering out of box options to overcome the status quo and the multiple challenges and the non-ending energy crisis with no light at the end of the tunnel.

One of the energy management options, the Petroleum Ministry is reported to be considering is to revitalise Government Holding Private Limited (GHPL), which established in 2000 under Petroleum Ministry, is a 100 percent state-owned company. The concept for its formation was to have a corporate management structure with a corporate business outlook to manage government interests in energy ventures in oil and gas exploration and production much isolated from the regulated and bureaucratic approach of the government functionaries. GHPL, established under a good business concept, could not deliver due to defeat on the very purpose it was formed for – the continued interference of the government and the vested interests in its operation.

The ministry is now reported to be considering utilising GHPL as the backbone for establishing subsidiaries to deal with the energy crisis. Five subsidiaries are proposed to manage power sector, two to manage LNG sector, one for the gas transmission and distribution, one for alternate energy and one for oil infrastructure. In total 10 subsidiaries are reported to be under consideration.

The mandate of these subsidiaries is to have a corporate and business approach to set up and manage energy projects like fast track addition of 1000MW to the grid through use of LNG at the existing five power plants dormant due to inefficient fuel mix, LNG and gas procurement – new pipeline needed for imported gas – transmission and distribution, Unbundling of SSGC and SNGPL assets and realignment in the new structure and to execute alternate energy projects.

This out of box approach of the Ministry could have the merit to turn around the energy sector of Pakistan, but the hard fact is that none of it is expected to happen considering the past track record and the present state of energy governance in the public sector of Pakistan.

GHPL, a skeleton pulled of the cupboard, remained largely a dormant entity over the last 15 years. GHPL subsidiary viz: Inter State Gas Company (Pvt) Ltd (ISGP), established as a business oriented company, over a decade back has not gone beyond a subservient entity to the Petroleum Ministry to observe developments, much at arms length, at Turkmenistan, Afghanistan, Pakistan and India gas pipeline (TAPI), Iran-Pakistan gas pipeline ( IP) and similar gas line projects on the drawing board

Over a year back, the government established the Gadani Coal Authority, with a corporate structure, to manage the implementation of Power Park based on coal-based power plants at Gadani with a total capacity of 6000MW under financing from China. Nargis Sethi was appointed as its first Chairman in addition to her charge as Federal Secretary for Water and Power. Nobody hears about this organisation any more. The grape wine news is that the organisation is dormant as Chinese have pulled out considering the project as non-viable as the government of Pakistan failed to put up, in the given timeframe, the promised coal unloading and transportation infrastructure. Much of public money is reported to have been wasted in its set up.

In parallel, to the ambitious energy management innovative plans of the federal government, the provincial governments are coming up with similar set-ups to manage similar energy mix of oil and gas, LNG, coal and renewable energy. The government of Punjab is in the lead in this.

With now less than three years left for the incumbent government to fix the energy needs of the country, they would be better off in fixing the existing humongous and much duplicating public entities riddled with poor governance with better governance and professional management. Even to manage the present public sector organisations there is a serious issue to position the professional management to manage entities like PSO, SSGC, SNGPL and similar, it is not understandable how these 10 subsidiaries, planned under GHPL, will be managed considering the availability and selection of the talents in the given timeframe failing which the fate of these subsidiaries will be no different from the present state-governed organisations.

Further, the government policies in the energy sector are conflicting. While on one hand, we are pursuing the policy of the deregulation and privatisation of the energy sector; on the other hand, however, the government has ambitions and temptation to create new entities to remain in business.

The federal and provincial governments will do good to come up with integrated and rational energy policies, do away with the temptation to remain in business and aim for policies which provide reliable and affordable energy to the people. It can still catch up to at least partly overcome the energy issues in the next over two years at its disposal.

(The writer is Chairman Avant Venture and Former President OICCI and ABB Pakistan)

Source: http://www.brecorder.com/articles-a-letters/187:articles/1227569:energy-sector-still-in-disarray/?date=2015-09-16