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Not a remedy


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THERE is much that is wrong with the management of the energy sector in Pakistan. But little of what has gone wrong and continues to go wrong can be rectified by the superior judiciary. Yesterday, the Supreme Court declared illegal the pricing mechanism for CNG and has ordered a price revision by Nov 1, a move that is likely to substantially reduce the price of CNG for use in vehicles across the country. Similarly, prompted by the SC’s intervention, the weekly adjustment of petroleum prices has been halted by the federal government until the Economic Coordination Committee issues fresh directions. Both moves are likely to be hailed by the public — but for the wrong reasons. Take the case of CNG. The basic problems in the gas sector are: proven gas reserves are fast dwindling because exploration for new reserves or a satisfactory import policy has not been forthcoming for many years; the gas that is being produced is utilised inefficiently because it is disproportionately allocated to unproductive uses such as to power vehicles rather than to business and industry; and the low price of gas in Pakistan has meant that companies were reluctant to explore for new gas reserves while the consumer is unprepared for the substantially higher prices that imported gas would bring.

It is with this in mind that the government announced the Petroleum (Exploration and Production) Policy 2012 in August in which substantially higher rates and other incentives were offered to lure foreign companies to Pakistan to explore for much-needed gas that many believe is underground. The alternative is to become dependent on imported gas which would dramatically push up the price of gas. So how does the SC’s move to get the price of CNG, available at gas stations across the country, reduced help the basic math and puzzle of Pakistan’s energy crisis? It doesn’t.

To be sure, the politically connected CNG fuel station owners across the country may be earning windfall profits but the bigger problem is that they are selling cheap gas that the country desperately needs to be channelled towards more productive uses. Instead of recognising that the historical policy itself is flawed, the court is tinkering with prices. CNG station owners will applaud, motorists with CNG kits will be grateful to the court, but the medium- and long-term logic are inexorable: suppressed prices will not spur investment in the gas sector, meaning the country will quickly run out of gas and either turn to more expensive fossil fuels or imported gas. At that not-too-distant point, what will a court order be able to achieve?

Comments (6) Closed

uaahmed Oct 26, 2012 09:46am
why would someone look for new reserves when you wont pay for them
Muneer Oct 26, 2012 05:54am
The judiciary is projecting itself as a popular entity rather than a legal judicial entity for some reasons. Problems and issues created by poor governance are resolved with a change in government through inter action of free media and elections over a period of time. Running of parallel government by judiciary can only destroy polity, politics and the country.
malik Oct 26, 2012 04:18am
Your editorial missed the point of how much CNG saves us in fuel imports. Raising price is not the answer. The answer is to look for new gas reserves and to efficeintly utilize present resources. Only if the rest of the world could convert half of their cars on CNG the price of crude could be $40 now.
Iftikhar Husain Oct 26, 2012 10:51am
As we have seen the price of energy is going up all the world over the price in Pakistan is reduced by the supreme court. The government is doing nothing they hsve to appoint experts to put a price structure to all energy fot the present and for future.
Salman Oct 26, 2012 10:09am
The SC needs to stop interefering in administration and policy making - stop trying to be the news everyday.
Sandip Oct 26, 2012 07:34pm
I strongly believe that prices should be linked to international prices. Government can provide help to general public by way of refund on income tax. e.g. a person making Rs. 20,000 owning one vechicle will get Rs. 500 as tax rebate. That way Government does not control the price secondly this also means everyone will start filing income tax.