KARACHI: The inefficiency of policymaking in Pakistan's energy sector was examined in a series of American cables in April 2008, when then US Ambassador Anne Patterson reported that “the haphazard mix of horizontally and vertically placed institutions which comprise the energy policymaking sector of Pakistan” has prevented a resolution of the country's power crisis.
The situation is complicated, she wrote in documents obtained by Dawn through WikiLeaks, by “the complex maze of GOP policymakers who cannot coordinate Pakistan's energy policy due to overlapping and contradictory authorities. … A lack of coordination and absence of any clear line of authority hampers any formulation of policy efforts to address the current energy crisis in Pakistan.”
Ms Patterson tried to explain the roles of the water and power ministry and 19 subordinate agencies, the ministry of petroleum and natural resources and 16 subsidiary agencies, and four other ministries and seven agencies she said were all involved in setting energy policy and running the power sector.
“The lead line agency in government for the electric power sector is the ministry of water and power (MWP),” she wrote. “However, the ministry of petroleum and natural resources (MPNR) controls fuel supplies; the finance ministry holds the purse strings; the Planning Commission manages the investment approval process; and National Electric Power Regulatory Authority regulates companies operating in the power sector.”
What follows is a detailed explanation of the numerous subsidiaries that are controlled by these organisations and the ways in which this complicated structure is hampering progress. One example cited is that of the Petroleum Refining and Petrochemical Corporation, a research body run by the Sui Southern Gas Company.
“While the idea of forming a research company to suggest upgrades to the petroleum sector was not bad,” the cable reported, “this organisation is a classic example of the insanity that prevails in Pakistan's energy sector.”
“This state-owned company is chartered to research technological improvements to the petroleum sector but it operates under the administrative control of a 'privatised' natural gas producer and distributor, SSGC which reports to the MPNR.”
There is also much critique in the cables of organisational structures that prevent government agencies from operating freely and efficiently.
“As a regulatory authority, the Oil and Gas Regulatory Authority is intended to be an autonomous body,” the cable reported, “but in practice it works under the influence of MPNR. (Comment: This influence was most recently noted when domestic retail oil price increases, which should be under OGRA's direct authority, were delayed for two months pending MPNR approvals.)”
Similar critiques are offered about the electricity-generation set-up. Attempts to unbundle the energy sector, the cables pointed out, have not been successful. “Pepco is responsible for overseeing the privatisation efforts related to thermal power … However … Wapda continues to forestall approval of drastically needed reforms to allow the unbundling to continue. …
“While GOP interlocutors tout Pepco's independence, in practice Pepco must get approval from Wapda for decisions who in turn seeks approval from the MWP. 'Privatisation' has not translated into 'independence' in Pakistan's energy sector.
“The unbundling of the power sector has resulted in the formation of 14 corporate entities; three power generation companies, one national transmission and power dispatch company (NTDC) and nine distribution companies. These companies are each working under independent boards of directors. Yet, Wapda still controls the finances of all these companies and in turn must get permission from the MWP to make payments to each entity.
“Despite GOP claims that these companies are administratively autonomous, none of these distribution companies have any autonomy over their finances sixteen years after creation.”
After offering several examples of organisational inefficiencies and lack of autonomy, the cables concluded that “with a total of six ministries and 42 agencies involved, there is an obvious need to reassess the usefulness of these organisations and eliminate duplication of responsibilities. Unfortunately, the demand for electricity was not a priority of the previous government until it was too late to increase supply to even remotely keep up with demand.
“While many proposals exist for creating new power generation, turf wars for operational control among the ministries and agencies have seriously slowed or completely halted the approval processes. …Timely decisions were not taken to utilise all available resources and no agency or ministry has the lead on implementing the National Energy Strategy.”
The cables anticipated today's serious energy crisis and its effects on law and order and economic growth. “With massive blackouts affecting every region and every demographic, energy policy and shortages are daily front-page news. Not a single megawatt of electricity has been added to Pakistan's national grid since 2000 despite record-breaking economic growth and population expansion.
“With economic and manufacturing capacity slumping due to power outages, unemployment is increasing while tempers and temperatures are rising.”
Also in April 2008, the ambassador met with the newly appointed Khwaja Asif, then minister for petroleum and natural resources, and Raja Pervaiz Ashraf, then minister for water and power.
With both ministers Ms Patterson discussed plans for dealing with the energy crisis and noted that the US was interested in holding an energy dialogue soon.
She did add, however, that previous energy dialogues “have not been as effective or as active as we would like but … we hope to see Pakistan prioritise energy assistance project requests instead of giving us as a 'wish list of projects that would total billions of dollars.'”