The central government has come up again with guidelines of an energy conservation policy, almost similar to the one approved by the federal cabinet in November 2006. But the policy 2006 was not implemented like many other official decisions, resulting in energy deficit and worsening of industrial crisis.

Now, after the world oil price touched $100 a barrel and receded to only $92 a barrel and the trade deficit rose to $10.3 billion in the first seven months of this financial year, a casual approach to energy conservation is utterly unsustainable.

The government cannot pump in more money in power production as it has already borrowed Rs317 million from the State Bank – more than double the budgeted amount for the whole year. The excessive borrowing from the State Bank and pumping the money into the market has led to the sharp rise in the prices of wheat, rice, vegetable ghee, edible oil , tea and a whole lot of other consumer items.

The Federal Food Committee has cautioned the government against a sharp rise in edible oil prices, partly due to higher import prices and partly due to the high import duty. Meanwhile, the Asian Development Bank has cautioned the government against obtaining foreign loans at low interest rates and lending the same to the public sector projects at exorbitant rates. The economic affairs ministry is now borrowing from the international agencies at nine per cent and re-lending it as project loans at 17 per cent.

In fact, this has been an outdated practice of the Economic Affairs division. It used to get interest -free foreign loans and lent it to provincial government at 10 per cent interest which defeated the purpose of the cheap loans. The SBP governor has been cautioning against the inflationary consequences of such borrowing and spending, but the government has not heeded to advice of Dr Shamshad Akhtar and has continued to borrow from the SBP which, in effect, is printing notes and spending far in excess of the budgeted sum of Rs130 billion.

The imports went up by 51.48 per cent in January compared to in the same month last year possibly for fear of sharp rupee depreciation and prices rising to meet the demand for larger consumer goods..

The government now wants $30 billion for the five mega dams and $10 billion for three subways in Karachi, Lahore and Islamabad. The money is to be borrowed. While its foreign debt has surged by $2.4 billion during first half of the current year to $42.88 billion.

The finance ministry officials argue the government can afford a larger deficit in view of the inflow of foreign money, particularly the swelling home remittances and the foreign direct investment. But the foreign investment is drying up pending the elections and the shape of government to come after the elections. The government cannot afford to let its current account deficit expand in the manner it has been in a country where the energy demand is expanding by nine per cent.

Already the industrial production has been hit hard by the poor electric supply and frequent load shedding. So the country can neither afford shortfalls when the demand is expanding by nine per cent every year nor raise large foreign loans in anticipation of more foreign investment.

Chinese companies are holding back their indicated investment pending the outcome of the elections but the Chinese government has indicated, it may be a partner in the Iran-Pakistan-India pipeline project which has been welcomed by the Pakistan government. If India finally withdraws from the deal, China can take its place as it is playing a leading role in energy expansion in Asia.

Meanwhile, the Planning Commission of Pakistan has withdrawn the non-starter projects so that it can go ahead with the projects in progress. Pakistan has also agreed to give a 20-year tax exemption for the Gwadar port. The government has indicated it is increasing the number of utility stores up to 6000 from 4500. Evidently, the public sector utility stores are to play a large part in the distribution of consumer goods at subsidised prices. Still the 6000 units with their restricted hours of work will be short of the real needs of the people. But as long as hoarders and profiteers are active, such an increase in the number of utility stores is essential. However the problem of rising oil prices as a result of international price rise cannot be solved through utility stores.

More determined efforts have to be made to increase the oil supply output and ensure its fair distribution. The energy conservation measures announced are for the industrial sector in particular. Industrialists have been complaining their power supply is far short of what they need and so the industries and the chambers of commerce should cooperate with the government in reducing consumption for non-productive purposes. If, as has been suggested, they use less power for heating in winter, and less energy for cooling their work places in summer and use more of energy saving bulbs, they can save up to 20-30 per cent of the power consumed. They can also use solar heating for water which has become economical.

But the problem is that inadequate energy saving is the security concerns of the industrialists. They have to light up their places more than usual. In the same manner 40 cars escort VVIPS in the name of security. On the other hand, it has been suggested the industries should use more of energy-saving bulbs and reduce their consumption of power.

Meanwhile, Wapda proposes to increase the tariff for the peak hour electricity consumption. . That can create a problem for the administration as shop keepers may argue they didn’t use so much power at a particular hour. The farm lords have to also cooperate with the government and reduce electricity consumption.. If they want more power, they have to co-operate with the government. Anyhow the problem is real and the shortage is lasting. The remedies have to be applied, unlike the last time, and the energy conservation measures made a success for sure this time.