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ISLAMABAD: Projecting the annual energy import bill to increase to a whopping $50 billion by 2026 from $12 billion now, energy sector companies asked the government on Tuesday to substantially raise domestic energy prices and sell natural gas and electricity to all consumers at a uniform rate by removing slab benefits being given to domestic consumers.
As the companies criticised the government’s energy policies, Water and Power Minister Syed Naveed Qamar told journalists that his ministry was proposing an integrated energy conservation plan, including two weekly holidays which would be enforced after consultation with provincial political leaders.
He said the plan helped to save 300MW of electricity last year, and if enforced more proactively it could result in higher savings.
He said at the conference that the government would launch this fiscal year international bonds and adjust its dividends from public sector companies against their receivables to significantly resolve the chronic circular debt issue.
He promised to push through the recommendations made by the conference for resolving energy sector problems, although many of them might be difficult to implement by a government in the fourth year of its tenure.
Mr Qamar said the government did not have a magic wand to overcome electricity shortfalls and adding that additions made to the capacity in two years absorbed only the economic growth rate because loadshedding remained where it was two years ago.
The three-day conference organised by energy sector companies accused the government of using the state-controlled gas sector for political leverage, resulting in over-commitment of gas supply which led to shortage and increased gas theft to alarming proportions.
The conference recommended that theft of gas and electricity be declared as non-bailable offence liable to severe penalty.
“If the current policies persist, Pakistan’s natural gas supply is expected to decline from four billion cubic feet per day (BCFD) in 2010-11 to less than one BCFD by 2025-26.
This will lead to a growing gas/energy shortfall reaching eight BCFD by 2025-26 and will depress Pakistan’s average GDP growth rate over these years,” said the Petroleum Institute of Pakistan which had organised the event.
The conference said it was unlikely that Pakistan would be able to substantially develop other indigenous energy sources (hydropower and coal) under current policies and the energy import requirements of the country would grow from the current 30 per cent to over 75 per cent of the energy mix by 2025-26 costing over $50 billion per annum in foreign exchange.
It said the government-controlled power sector—one of the largest consumers of primary energy—was facing growing problems because of ‘an unrealistic power tariff, high inefficiencies, low payment recovery and the government’s inability to manage its subsidy mechanism, leading to a serious circular debt issue which was becoming a barrier to future energy sector investments.
It said that gas prices in the country were significantly lower than those of alternative fuels and called for making the prices compatible with replacement fuels like LPG, furnace oil and LNG and pipeline imports through an ‘enhanced gas surcharge’ and all pricing slabs—generally providing gas at cheaper rates to household consumers—be abolished and a single price introduced for all volumes.
The participants said that gas price incentives for exploration and development companies were not attractive enough to get new investments while security issues and uncertainty in exploration policies were also barriers to fresh investments.
They called for progressive deregulation of the exploration and development sector to allow companies to sell their new discoveries at the market-based price directly to consumers through an open transmission system.
They called for allowing the private sector to set up LNG terminals with government guarantees for capacity utilisation and develop more ports for LNG handling.
For the power sector, they urged the government to disband the single national tariff and allow distribution companies to recover true power costs in different parts of the country.
“The power tariff for each distribution company be deregulated, with no pricing slabs and no government subsidy,” they said, adding that the power sector had become heavily politicised, with the government unable to improve its performance.
“Consumers, both government and private, are able to resort to power theft and non-payment without fear of repercussions.”
They said that thermal power generation based on oil, gas and coal be given to the private sector and public sector plants be privatised. The public sector, they said, should focus on development of hydropower resources.
They said the conflicting roles of petroleum and power ministries were contributing to the crisis and hence both ministries should be merged into an energy ministry and their regulatory bodies merged into a single authority.
