LAHORE: Experts have urged the government to immediately go for energy sector reforms along with decentralisation and deregulation of the sector in a bid to put the country on a sustainable path leading towards economic sovereignty.
In a letter addressed to the government, major politicians, and decision-makers, over two dozen independent experts from the energy, education, security, and monetary sectors proposed various reforms required to be introduced as soon as possible by the government.
“Since Pakistan’s economy is currently in severe distress—one of the worst economic crises in its history—due to high inflation, large twin deficits, dwindling foreign exchange reserves, a fast weakening currency and elevated Eurobond yields, its external and fiscal finances are crumbling under the overwhelming weight of energy costs,” the letter read.
“Imports, which account for 43 per cent of total primary energy supply in FY20, have been steadily increasing. At more than $26 billion, energy imports (oil, LNG, and coal) are the single biggest contributor to Pakistan’s current account deficit of $17.4 billion in FY22. It is tragic that a country endowed with large fossil fuel reserves and huge renewable resources meets more than two-fifth of its energy needs through imports, it added.
The experts suggest immediate overhauling of governance while building institutional capacity, as excessive government involvement is the central cause of the present state of affairs in the energy sector. According to them, for the sector to function properly, it must be decentralised and deregulated.
“The energy ministry’s role must be restricted to policy making and not actually running the energy sector entities. The energy ministry needs to be staffed with professionals with relevant sector knowledge and experience. Moreover, Nepra and Ogra must be turned into first-class regulatory bodies staffed with professionals,” the letter signed by the experts, including Aamir Khattak (security analyst), Abdul Rehman Warraich (Ex-Director General, Debt Office, MOF), Dr. Adeel Waqas (Professor of Economics, NUST) and Dr. Ashfaque Hassan Khan (Principal, School of Social Sciences & Humanities, NUST) said.
“Immediate relief to Pakistan’s external and fiscal finances can only come from adherence to strict energy conservation measures,” the document added.
The experts suggest the introduction of daylight saving timing by moving clocks forward by at least one hour; the closure of shopping centres by 7pm; restaurants/wedding halls by 10pm; bank branches by 2pm; all public/private offices at 5pm; and the reduction of school working days to four per week with longer hours per working day and switching off alternate street lights.
They further recommend reallocating unused gas commitments, encouraging third-party sales at bilaterally negotiated prices, and increasing wellhead prices for older fields and tight gas reserves to increase natural gas production. They further suggest electrification of energy use, as according to them, out of the 80.6 million TOEs of Pakistan’s primary energy consumption in FY20, 50pc went into electricity generation, 21pc in transportation and 11pc in the residential sector.
While desiring energy efficiency and the removal of price anomalies, they urged the decision makers to make the ongoing situation Pakistan’s last economic crisis by resolving them forever.
Published in Dawn, August 16th, 2022