KARACHI: Speakers on Tuesday called for political stability to attract investment as well as to carry out major reforms in the energy sector to tackle its growing crisis in the country.
They were speaking at a seminar on economic performance and challenges ahead organised by Pakistan Tehreek-e-Insaf (PTI), which was attended by people from the corporate sector as well as the business community.
Asif Ali Querashi, energy expert in a presentation said that the economy was crumbing under the weight of the energy sector.
Proposing a five pronged strategy for energy sector, he asked for restructuring of legal, regulatory and governance framework, rationalisation of energy prices, indigenisation of energy supply, privatisation of public sector energy companies and electrification of energy use.
He suggested integrating the Power and Petroleum Divisions within the Ministry of Energy with single minister for energy and one secretary energy. He also proposed the unification of energy regulators/quasi-regulators (NEPRA, OGRA, etc) into National Energy Regulatory Authority as well as appointment of members of the regulatory board in functional roles through a transparent and merit-based process and market-based compensation for board and staff members.
Besides, capacity building of the ministry, regulator and other energy sector institutions, he also asked for an overarching National Energy Policy with sub-policies for exploration and production, oil refining, power, etc.
Querashi called for strict enforcement of energy efficiency standards for power generators, electrical and gas appliances and buildings, as well as a roadmap for complete de-regulation of the energy sector.
Major increase in natural gas prices needed to be economised and its consumption and unified. There was a need for a framework for pricing of all energy substitutes based on their respective heating values while levying carbon taxes based on the fuel’s environmental cost, he added.
The expert demanded to remove all cross-subsidies in energy tariffs and to replace with direct/targeted subsidies and competitive industrial electricity tariffs. This, he said would discourage captive power generation as well as extend tenors of project debts of power plants to flatten rising capacity payments.
About 45 percent of capacity payments were related to the public sector with NPPs and hydropower holding the lion’s share.
The energy expert also called for enabling production from existing non-producing gas fields (not producing due to unfavourable field economics under applicable petroleum policy) on bilaterally negotiated prices and encouraging upstream activities and their expansion into under/un-explored regions by addressing the key issues and providing adequate security, simplifying approval processes and offering better wellhead pricing.
He suggested provision of higher prices for tight gas reserves and resolving gas sector circular debt to improve E&P companies’ liquidity as well as Thar Coal. “Encourage substitution of imported coal through blending in existing power/cement plants and carrying out feasibility studies and test projects for coal gasification,” Querashi said.
Azfar Ahsan, former chairman, Board of Investment, said that a major hindrance in investment was political instability in the country.
Ahsan said that until and unless there was political stability in the country, there was no possibility of increasing major investment in Pakistan.