THE depth and breadth of the energy crisis Pakistan has faced for almost a decade now demands out-of-the-box and innovative solutions.

It also requires putting together all energies, synergies and resources to leave behind this bad patch of our national history.

The Ministry of Petroleum and Natural Resources seems to be trying just that by redefining its role beyond the decades-old Rules of Business 1973. And in doing so, it is trying to reinvent the wheel.

Under the rules of business, Wapda was required during the era of nationalisation to take care of all matters relating to power generation, transmission, distribution and sales etc.

But the inefficiencies of the public sector and its 15 companies — power holding company, gencos and discos etc — have led us to the prevailing problems, despite all the expertise.

This gave birth to the narrative of “it is not the government’s business to do business,” and hence privatisation was pursued by all governments since the early 1990s to get rid of the inefficient public sector.

Impressed by the Chinese model, Petroleum Minister Shahid Khaqan Abbasi wants one of the petroleum ministry’s newly established firms — Government Holdings Private Limited (GHPL) — to multiply asset creation in the public sector by setting up a dozen companies, including five power firms.

The petroleum minister wants the Government Holdings Private Limited to multiply asset creation in the public sector by setting up almost a dozen companies, including five power firms

He apparently took cue from a meeting of the cabinet committee on energy — led by Prime Minister Nawaz Sharif — that allowed the setting up of around 3,600MW of imported LNG-based power projects in the public sector early last year. A 1,000MW LNG-based project was assigned to the petroleum ministry.

This was a departure from the ban on the setting up of power plants (except hydroelectric ones) in the public sector that was followed by five successive governments. A one-time exception was considered in view of the comparatively greater time required by private parties to put together finances from domestic and international lenders, in addition to taking over two years to complete the project.

The government has to deliver its promise of ending load-shedding by 2017, the terminal year before the next elections. Can an exception for an emergency be adopted as a policy or rule, and if so, why shouldn’t the power ministry set up more power companies or at least retain the existing ones?

Abbasi argues that the China Poly Group Corporation was formed in 1992 and now it is among 166 central enterprises under the supervision and management of the state-owned Asset Supervision and Administration Commission (SASAC).

On the same pattern, the operations of GHPL should not be limited only to exploration and production activities, but should be expanded to other areas of energy as well.

The minister has made up plans to set up a GHPL Power Generation Company and has also moved a summary to the Economic Coordination Committee (ECC) of the Cabinet for approval. This company, according to Abbasi, will set up power plants in Sukkur, Multan, Shahdra-Lahore, Faisalabad and Mardan at the sites of non-functional power plants of the water and power ministry’s Genco Holding Company.

“Since someone apart from the Ministry of Water and Power has to take the initiative, the GHPL seems to be the best choice to set up these power generation subsidiary companies,” he said. As a result, five separate companies will be registered with names along the lines of GHPL Power Generation Sukkur Ltd.

The GHPL, a 100pc subsidiary of the ministry, was created in 2000 to separate the regulatory and commercial functions and efficiently manage the government’s interest in petroleum and exploration and production joint ventures, which were previously managed by the directorate general of petroleum concessions.

The minister has argued that GHPL’s role has been ‘gradually fading’ after the 18th amendment as it can hold only 2.5pc shareholding in future exploration and production activities without further increasing its shares in the subsequent hydrocarbon discoveries in the country.

Interestingly, the minister is not satisfied with the performance of the Sui Southern and Sui Northern gas companies. He thinks the two firms have not been forthcoming in facilitating LNG imports. He adds that they have not been able to look for additional gas sources, their system losses are rising, and they are failing to meet expectations even though their monopolistic licences have already come to an end.

Hypothetically, in their existing business models, the two gas companies are to reach their logical winding up as the existing gas fields deplete going forward and as they are unable to meet their shareholders’ and stakeholders’ expectations — with the government being a major one.

In that quest, the government has planned five separate subsidiary companies. They will deal with segments like LNG terminals, gas pipeline and oil storage infrastructure, and alternative energy.

One of these will be the Pakistan LNG Limited, which will handle LNG imports and push PSO out of this business going forward.

Published in Dawn, Business & Finance weekly, September 28th, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play