The last fifty years have been truly breathtaking. They have reassured us that whatever challenges we face, we can understand and eventually conquer using technology.

If the world is running out of food, we will rely on technology to increase land productivity through fertilisers, pesticides, herbicides and improved irrigation.

If we lack energy resources, we will scale up fossil fuel supplies and increase exploration in tough areas.

We see the same harbinger of hope in Pakistan’s energy sector today.

Still an energy deficient country, Pakistan has pinned all its hopes on coal, RLNG and nuclear technology, calling them ‘game-changers’, just like when it pinned all its hopes on short term oil and diesel firing stations in the 1990s.

For a brief period, the country had an energy surplus through which it reaped rewards but the brunt started to be felt when foreign exchange outflows became burdensome and the high revenue shortfalls led towards circular debt.

Circular debt has now become a permanent feature of Pakistan’s economy. The last bail out happened just four years ago — for a massive Rs480 billion; and the amount has once again ballooned up to more than Rs400bn today.

Tariffs have also increased four times since 2008, surcharges are adversely affecting the industrial base and export competitiveness has hit an all-time low — coupled with an all-time high trade deficit.

As it often happens with technology, those who are the early beneficiaries reap all the rewards, while the late comers are left to pay the excessive price years later.

We are now made to believe that coal, RLNG and nuclear energy will change the country’s energy landscape and put it on the path towards achieving another surplus.

While this may be true, the goal of a viable energy sector is not to achieve an energy but to provide reliable, affordable and clean energy to all on an ongoing basis.

Let’s briefly analyse the new-found love for coal, RLNG and nuclear.

Today the country has an average generation of 11,000MW in the system, which accumulates circular debt to an extent of Rs100bn every year.

Doubling only the power generation, while keeping everything else constant, will double the amount of circular debt accumulation. This means that the Rs400bn that we accumulated in four years will now be accumulated in two years’ time.

High circular debt will pose fiscal pressures on the power sector, which, in turn, will leave the government with two options: either pick the additional costs as subsidies or recover high costs from consumers in the form of tariffs.

Increasing the subsidy will constrain governmental resources that could have been invested in more productive areas, such as health and education. This will also create a vicious cycle with stakeholders relying on the government to repeatedly bail them out.

If the country increases tariffs, industrial performance will suffer further. We are already witnessing dwindling export numbers — which have come down to only $20.5bn as compared to Bangladesh’s $38.7bn in 2016 — primarily because surcharges are being imposed on industrial and commercial users to cross-subsidise more vulnerable residential and agricultural consumers.

Policymakers on the other hand emphasise that with the transition to coal, RLNG and nuclear, the cost of generation will come down, which will expand the economy and make Pakistan a competitive industrial region, thereby creating employment opportunities and fostering economic growth.

But this is the same story told when the 1994 power policy was announced, the 2001 power policy became operational and now with the latest rounds of infrastructure initiatives.

However, if the past is any guide, then this positive outcome is not going to take place.

Pakistan’s industry has not become competitive in the last twenty years by relying on fossil fuels. It has paid subsidies of more than Rs2,000bn in the last 7 years alone; and has bailed itself out from circular debt every time without any permanent solution.

The cost of generation will go down and will benefit the country for a short time. But what about the high interest and profit repatriation payments starting FY2018-19?

The country has promised roughly 17pc project Internal Rate of Return’s to all energy projects which essentially implies that almost all the capacity payments will flow outside Pakistan along with the fuel import price.

The IMF already estimates Pakistan’s balance of payment impact at $4.5bn per annum due to CPEC projects — a hefty price tag in the long run.

The country also needs to be mindful of another facet of modern technological optimism — the irreversibility of technology deployment.

Like the industrial revolution where the immediate benefits were immense, we only realise the threats posed by climate change today.

As we understand now, climate change is not easily reversible and requires a completely different, counter set of actions to go back to square one.

Similarly, Pakistan’s transition to coal, RLNG and nuclear power seems very intuitive today. But once installed, will not be easy to let go.

Today we can see the resistance to move away from diesel and oil based power generation because there are entrenched interests linked with fuel and tanker mafias.

The irreversibility of technology also brings irreversibility to correction and cure. The future of coal and RLNG could lead us to avoiding self-correcting measures in importing these products just because a small, powerful, faction’s economic interests are attached to it.

The irreversibility may also put a lid on issues such as environmental emission standards, climate change threats, population safety values and water availability and scarcity issues that no one gives the proper weightage to today.

Lastly, there is the zero-infinity characteristic of modern technology optimism, which refers to some risks that are extraordinarily unlikely to occur, but are catastrophic if they do.

Japan never thought of risks associated with nuclear power before Fukushima happened in 2011. However, the incident changed the energy policy landscape and Japan had to take some painful and expensive decisions to revert to an alternative.

Pakistan is also in the process of adopting nuclear technology. Though we have an impeccable record in nuclear to date, there will always be a risk looming on the horizon of an unfortunate incident that may, in the blink of an eye, put millions of lives in jeopardy.

In its energy policy scenario, Pakistan needs to evaluate all technological options on merit. No one set of technology should be embraced whole heartedly or be called a ‘game changer’.

The only real game changer is predictive policymaking, combined with a strong regulatory authority which sets the tone for the sector.

Decisions need to be evaluated on a continuous basis and on merit, irreversibility must be challenged early and giant leaps of faith on technology must be avoided.

The writer serves as a consultant to the Asian Development Bank

Published in Dawn, The Business and Finance Weekly, August 21st, 2017