WASHINGTON: There is no immediate cure for Pakistan’s energy crisis but the country can turn around the situation through comprehensive planning and hard work, says a US study released on Wednesday.

The report by the Washington-based US Institute of Peace notes that the severe heatwave that has claimed hundreds of lives over the past four days, is also challenging the government’s pledges to provide uninterrupted electricity during Ramazan.

“Performance can only be turned around through comprehensive plans to replace and modernise assets, attract the best human and managerial resources, implement modern managerial practices, and reduce discretion and misuse of authority,” says the report.

The research paper — “Pakistan’s Power Crisis: The Way Forward” — provides a detailed assessment of the causes of the power crisis in Pakistan.

One of the authors, Rashid Aziz, worked for 25 years as senior energy specialist in the World Bank. Munawar Baseer Ahmad has held senior positions in the public sector, including managing director of Sui Southern Gas Company and of Pakistan Electric Power Company.

They blame “disconnects between electricity tariff rates and the cost of production, variable rates of collection, and persistent underinvestment in new capacity despite rising demand” for the current crisis.

The authors argue that multiple challenges confronting the power and energy sector can be addressed only with the active participation of all stakeholders.

‘Energy consumers need to be made aware of, and accept, the true cost of energy. Industrial and commercial users need to be told that relying on cheap electricity and gas is not a realistic option,” the report says.

The so-called rich and powerful must stop interfering in the utilities’ efforts to curtail theft and non-payment.

The study suggests the following priorities for resolving the energy crisis:

Increasing the physical power supply can only be achieved over the long term, and all efforts should be made to avoid unrealistic expectations that it can be done within five years.

Projects to develop new generation capacity cannot turn into high-cost sources of supply, as has occurred with past efforts to shift generation to imported fuel oil. Subjecting those projects to least-cost criteria and competitive pressure can reduce this risk.

Some investment incentives may initially be needed. But achieving cost reductions over time requires that these be limited to only the first set of projects.

As the government agreed under the IMF’s Extended Fund Facility loan programme, electricity tariffs will need to be raised to account for the full cost of supply, with targeted subsidy exceptions to help the lowest income quintile.

Published in Dawn, June 25th, 2015

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