PAKISTAN is facing an acute energy crisis. The loss to the GDP due to this is said to be about 2pc, but the agony from load-shedding is incalculable.

However, the energy crisis is being conceived of and dealt with as an electricity problem, even though electricity provides only 16pc of the final energy consumption as compared to 29pc by oil and 44pc by gas. More than half the electricity is generated by oil and gas. Many industrial units have their own energy plants and do not face any energy problem if they get an adequate supply of gas round the year, especially in the winter months.

The allocation to power in the Public Sector Development Programme (PSDP) has increased from Rs51 billion in 2013-14 to Rs63.6bn in 2014-15. Compare this with the allocation for the National Highway Authority, which has almost doubled from Rs63bn in 2013-14 to Rs112bn in 2014-15. The major allocations are for the Pak-China corridor of Rs49bn, whose total cost would be Rs746bn and Rs30bn for the Lahore-Karachi Motorway, whose total cost will also exceed hundreds of billions of rupees.

The Pak-China corridor from Kashgar to Gwadar is expected to lead to the emergence of many economic zones, and the same is expected from the improvement of the Lahore-Karachi highway to a motorway.

Pakistan’s topography and geology provide an opportunity for utilising shale technology.

In the oil and gas sector, the Oil and Gas Development Corporation (OGDC) is the biggest public-sector corporation which produces about half of Pakistan’s oil and one-third of its gas. The nine months’ profit of OGDC, after tax, is Rs91bn and will exceed Rs120bn after the completion of the financial year. However, there is no allocation for the OGDC in the PSDP.

Oil and gas production increases with successful exploratory wells. Pakistan’s success rate in exploratory wells is one in three, whereas the worldwide ratio is one in six. Despite the high success ratio, foreign companies are reluctant to explore in Pakistan because of the security situation. Sindh and Balochistan are very rich in gas, and oil is scattered all over Pakistan. Recently, we discovered 5,500 barrels of oil per day near Jhelum; this will take our total oil production to 100,000 barrels per day (which is a puny amount compared to millions of barrels produced by Iran and still more by Saudi Arabia).

In the current financial year we are digging only 50 exploratory wells and OGDC is digging only five. Given its strength in oil and gas production OGDC should be exploring at least 20, but the government is not interested in OGDC playing a big role in development of oil and gas resources. The government kept the post of the CEO vacant for more than one year. The importance of OGDC in the national economy demands an extremely competent management and a well-appraised, state-of-the-art drilling programme.

Shale technology in oil and gas has revolutionised the industry. The US, which was a big importer of crude oil, will become an exporter after utilising this technology in its oil and gas sector. The word shale does not exist in the development programme of Pakistan, although Pakistan’s topography and the geology of the Indus basin provide an excellent opportunity for utilising this technology for developing the oil and gas sector.

The Economic Survey 2013-14 states: “The government’s strategy will focus on disinvesting the government shareholding in various entities, especially oil and gas.” No country in the world, developed or developing, has privatised its oil and gas assets to foreigners. In the US, which is a citadel of free-enterprise capitalism, the Chinese were interested in buying Unocal, a small US company which produces only 1pc of domestic oil. There was so much uproar in the US Congress and media that China withdrew its offer.

Oil and gas assets are strategic entities, perhaps more strategic than armament factories. The partial privatisation of OGDC will be in total defiance of international practice as no country sells its strategic assets.

Billions of rupees have been allocated to the Pak-China Economic Corridor, the Karachi-Lahore Motorway and the Rawalpindi-Islamabad metro bus. These allocations would be understandable in oil-rich countries such as Saudi Arabia, producing millions of barrels of oil. Also, the expectation of the emergence of economic zones is justified neither in economic theory nor practice. Roads are necessary but not sufficient conditions for the emergence of economic zones. Moreover, neither on the Karakoram Highway nor on the Islamabad-Lahore Motorway has any economic zone emerged — not even a housing colony.

At this critical juncture of our history, it would defy economic principles and national interests if the government did not divert the billions allocated to the Pak-China corridor and the prestigious motorway and metro bus projects to energy projects such as the Dasu dam, and especially for drilling more wells for oil and gas. Pakistan’s economic salvation lies in finding another Sui and/or an oil bonanza and in using shale technology.

The writer is former secretary planning.

Published in Dawn, June 26th, 2014