Gilani revamping Energy !?

[CLIPPER4LIFE]

Gilani orders revamp of energy sector​

By Summera Khan
Published: April 18, 2011
​

No new gas connections for six months, heads and boards of directors of all state-owned oil and gas companies removed.
ISLAMABAD:
Hours after President Asif Ali Zardari reappointed him adviser to the prime minister on petroleum, newly-elected Senator Asim Hussain was ordered by Prime Minister Yousaf Raza Gilani to embark on an ambitious plan to revamp the country’s energy sector.
In a meeting between Senator Hussain and the prime minister at the premier’s official residence in Islamabad on Sunday evening, Gilani laid out a plan that was focused on managing the severe energy crisis in the country.
Among the problems facing the energy sector are an extreme shortage of natural gas and a massive inter-corporate circular debt problem that has debilitated the production capacity of power generation companies and refineries.
The most immediate consequence for ordinary consumers will be the six-month ban on new gas connections, which the prime minister said would not be granted “under any circumstance.”
But most of the plan seemed focused on reforming the way oil and gas companies operate in Pakistan, with a view to increasing domestic production capacity.
All of the managing directors of the state-owned oil and gas companies have been removed from their jobs with immediate effect. These include the heads of some of the largest companies in Pakistan, including the Oil & Gas Development Corporation, Pakistan Petroleum, Sui Northern Gas Pipelines, and Sui Southern Gas Company, among others.
The boards of directors of each of these companies will also be removed and reconstituted. In a bid to insulate the companies from political interference, the petroleum minister and petroleum secretary will not be represented on the board, despite the government being the single largest shareholder.
The government has often been criticised for forcing state-owned energy companies to pay dividends to fill its budget gaps rather than allowing them to reinvest their profits into expanding domestic energy production. The prime minister’s moves appear to be geared towards addressing that criticism.
In addition, the prime minister also ordered the ministry to remove any regulatory impediments to the domestic exploration and distribution of oil and gas.
In a bid to improve the efficiency of the ministry itself, all petroleum ministry employees over the age of 60 or who are on contract were immediately removed from their positions.
Sui Northern Gas Pipelines and Sui Southern Gas Company, the country’s only two retail gas distribution companies, have been ordered to create a joint venture company that will import, market and distribute liquefied petroleum gas (LPG) into the country.
The petroleum ministry was also ordered to come up with a two-year plan to begin increasing domestic production of oil and gas.
The prime minister also ordered the ministry to vigorously pursue court cases against people accused of not paying their utility bills, one of the single biggest financial obstacles faced by energy companies in Pakistan.
All of these moves come as part of the prime minister’s “hydrocarbon vision” for the next 20 years, which includes a plan to substantially increase the amount of energy the country derives from coal. The Thar Desert in Sindh has one of the largest reserves of coal in the world.
Senator Asim Hussain will resume his duties as the prime minister’s adviser on petroleum, a cabinet level position, on Monday (today). He had been removed from the position earlier on allegations of corruption.
The senator was also asked by the prime minister to “rationalise” the prices of petroleum products in the near term, a euphemism for trying to find the balance between prices that are economically necessary (higher) and those that are politically feasible (lower).
The senator is a close personal friend of the president. Both of them attended Cadet College Petaro. Additional
reporting by Zia Khan

* all in all they are just statements, but i really like the idea of the government not getting involved in the gas and oil industry at all. Finally these things will become private industries. Maybe the gov. should also do this for the railways too.

Published in The Express Tribune, April 18th, 2011.

 

[niaz]

I agree one hundred per cent. This is all window dressing. Energy is main ingredient of the industrial growth. But this government is expert in doing nothing. At the risk of repeating 'N' times, let me restate situation in the oil sector.

1. What is the point of increasing domestic gas connections when there is no gas available? All it would do would be to increase gas load shedding.

2.Circular debt is a constant problem. Gov't departments, FATA and many other establishments don’t pay their bills and there is a large ‘Kunda connection’ mafia resulting in loss of revenues to WAPDA, KESC and other IPP’s. These in turn don’t pay to PSO. PSO thus cannot pay to the refineries and reduces imports. Refineries cut their crude runs because there is no money to buy crude which results in larger import requirement.

3.GOP instead of resolving this situation finances rental power plants which increase import bill and produce more expensive electricity.

This is the limit of hypocrisy. Solving circular debt will allow utilization of at least 1000 MW spare capacity with the IPP’s lying idle due to lack of funds for purchasing fuel. But this would not generate any commission for the people in power as was the case with the Rentals. PPP has therefore no incentive to do anything about it.

Who is this Asim Hussain? I have never heard of him as an expert in oil or energy field. What is he going to advise when he doesn’t know much himself? His only qualification is that he is a friend of the Mr 10%.

Nothing will ever change as long as current lot of inept politicians remain in power. If any change does come, it would be not because of them but despite them.

 

[Pioneerfirst]

No matter you bring foreigner or Pakistani,they should not be corrupt.
Mr.Asim himself has a corrupt past in his last period in ministry of pertrolium many cases of corruption and kickbacks were seen.At all he is a personal friend of Zardari.We have no shortage of professional and honest people.
If corrupt foreigner are appointed then who will call them back from their country after two yrs if they are found in corruption.So their will be no proof of corruption.
"If u can not reach the culprit then how can u reach to the DON" this what our MR.10% is thinking

 

[ajpirzada]

I agree one hundred per cent. This is all window dressing. Energy is main ingredient of the industrial growth. But this government is expert in doing nothing. At the risk of repeating 'N' times, let me restate situation in the oil sector.

1. What is the point of increasing domestic gas connections when there is no gas available? All it would do would be to increase gas load shedding.

2.Circular debt is a constant problem. Gov't departments, FATA and many other establishments don’t pay their bills and there is a large ‘Kunda connection’ mafia resulting in loss of revenues to WAPDA, KESC and other IPP’s. These in turn don’t pay to PSO. PSO thus cannot pay to the refineries and reduces imports. Refineries cut their crude runs because there is no money to buy crude which results in larger import requirement.

3.GOP instead of resolving this situation finances rental power plants which increase import bill and produce more expensive electricity.

This is the limit of hypocrisy. Solving circular debt will allow utilization of at least 1000 MW spare capacity with the IPP’s lying idle due to lack of funds for purchasing fuel. But this would not generate any commission for the people in power as was the case with the Rentals. PPP has therefore no incentive to do anything about it.

Who is this Asim Hussain? I have never heard of him as an expert in oil or energy field. What is he going to advise when he doesn’t know much himself? His only qualification is that he is a friend of the Mr 10%.

Nothing will ever change as long as current lot of inept politicians remain in power. If any change does come, it would be not because of them but despite them.

add to that the efficiency of our DISCOs and GENCOs which is only 20%. World Average is around 60%.
why then do we need to focus on new plants be they IPP or RPP? why not invest our time and energy in improving the overall efficiency of the system? but you know what... working towards improving efficiency is an intelligent thing to do

 

[somebozo]

Having few experiences in SSGC the top management appears to be most incompetent and least bothered.. The lower and middle management is one of the best an enterprise can ask for with sense of serving.

 

[muse]

All of the managing directors of the state-owned oil and gas companies have been removed from their jobs with immediate effect. These include the heads of some of the largest companies in Pakistan, including the Oil & Gas Development Corporation, Pakistan Petroleum, Sui Northern Gas Pipelines, and Sui Southern Gas Company, among others.
The boards of directors of each of these companies will also be removed and reconstituted. In a bid to insulate the companies from political interference, the petroleum minister and petroleum secretary will not be represented on the board, despite the government being the single largest shareholder.
The government has often been criticised for forcing state-owned energy companies to pay dividends to fill its budget gaps rather than allowing them to reinvest their profits into expanding domestic energy production. The prime minister’s moves appear to be geared towards addressing that criticism.

That really is rather impressive but as usual we don't really know what other scenarios will be developed in the future - for instance, the main problem they seem to be dealing with is the problem of politicians milking public institutions -- now perhaps bureaucrats will milk these public trusts -- Why is the govt the main or majority owner of these companies?? What major or even minor success can the government of Pakistan point to, that may give us some confidence in her management of such entities??

Beyond the problem of political patronage and the associated mismanagement, the real problem is that exploration has not been economically or financially, significant -- Why is this?? Does the technology not exist in Pakistan? - - It really is a bit of a mystery to me.

 

[fatman17]

ROVER’S DIARY: Load shedding will not go away —Babar Ayaz


Theft and payments due can be addressed if the government adopts zero tolerance for electricity theft and supply discontinuation in the case of default, no matter whether the defaulter is the Senate or the President’s House(pipe-dream)

Pakistan is faced with many crises. While terrorism is at the top of the crises list, which has to be dealt with by the government, the second place in this list is being competed for by energy shortages and inflation. Both are closely linked with each other. Much has been written on the ongoing terrorism and rising challenge to the writ of the state by the jihadi hydra and, for many years, this will remain a hot topic.

Minister for Power Naveed Qamar was right when he said that the government does not have a magic wand to bridge the yawning gap between power demand and supply overnight. He is right because, over the years, the problem has become too complex. Some of the major factors that have led to the present heavy load-shedding are: bloating circular debt, high cost of fuel, non-availability of cheaper fuels, slower investments in new projects, inefficient power generation and distribution systems, power theft and non-payment of electricity dues.

The circular debt issue in the energy sector is nothing new. Previous governments also faced this problem. Once circular debt crosses the danger line, the government comes and injects a booster. But a booster is a booster and not a panacea for the actual disease. Why do we have circular debt? Prominent reasons abound. The government is giving an average of three rupees subsidy per kilowatt hour. Electricity purchase and distribution companies face this loss because, at an average, 20-30 percent of electricity is stolen and government departments do not pay in time. All this adds to the per unit value of electricity, making it expensive for the end-consumer. Theft and payments due can be addressed if the government adopts zero tolerance for electricity theft and supply discontinuation in the case of default, no matter whether the defaulter is the Senate or the President’s House. A good suggestion given at the recent Pakistan Energy Conference 2011 was that electricity theft should be declared a criminal and non-bailable offence.

Another reason for the high price of electricity is that the share of fuel oil is increasing in the power generation fuel mix. Indigenous natural gas share stands at almost 32 percent, oil at 35 percent, hydel at 30 percent, coal at 0.1 percent and nuclear at 1.8 percent. Electricity generation is thus mainly dependent on natural gas and imported furnace oil.

This is because the country is short on natural gas and the available resources are being exploited to the maximum. The electricity producers claim that they should have the first right over natural gas as domestic users burn it as a cheap fuel and want it even in the remotest village, whether it is economically feasible or not. The fertiliser industry has its own claim also on the argument that they supply essential agriculture input. Other industries are way down in the gas supply priority list.

Other cheaper sources have been neglected in the past or have been bogged down by the petty centre versus provinces tussle for power. Coal contributes just 0.1 percent of our power generation needs in sharp contrast to the world’s 41 percent. It is not that we do not have coal. It is for years that the federal government did not let the provincial government of Sindh harness the vast Thar coal reserves. I have personally seen federal bureaucracy claiming that, as electricity is a federal subject, the Sindh government cannot move on the Thar coal project for power generation without their approval. However, now the much-maligned present government has resolved this issue and sufficient progress has been made to employ coal for electricity production. For the first time, I am not cynical about the future of this project, where a good company like Engro has taken the lead in signing a joint venture with the Sindh government. But, as the gestation period is not less than 3 to 4 years, it is possible that the benefit of Pakistan shifting to coal-based energy in a big way would go to the government that will be sworn in in 2013.

Another cheaper source of energy in Pakistan is hydel. It contributes to almost 30 percent of the total production. But the problem of its availability is dependent on the flow of water in the rivers, which makes its supply inconsistent. For example, these days, hydel energy production in the country is around one-fourth of its capacity because of low water flows. The temperature in the north has not risen enough to melt the glaciers, which are a major source of water in our rivers. New investment in hydel should be in mini run-of-the-river power generation projects so that there is no political opposition, as we have seen in the case of Kalabagh. The Bhasha Dam, which is to be inaugurated shortly, is also a long gestation project. Here, another problem is that not many foreign investors are keen to come to Pakistan for long term investment in a capital intensive hydel project. The deal has to be made on a government-to-government level, provided our superior judiciary realises the economic implications of shooting down such deals in the name of transparency. Tied loans are not fair to the borrowing countries but they are better than having no loans and investment.

Coming back to circular debt, it has to be noted that it is also becoming a red herring for foreign investors. Take the case of Hubco. It has receivables close to Rs 100 billion, which is more than its equity. “In a business environment where the payments guaranteed by the government are delayed for months, who in their right mind will venture into a new project?” one IPP executive asked me at the conference. Now that the government is thinking of floating some kind of exchangeable bonds to raise money for retiring close to Rs 300 billion of the circular debt, the question is: what is the guarantee that once this deck is cleared another will not be back on the table? Perhaps none, because we are not focusing enough on removing the cause of this problem.

The writer can be reached at ayazbabar@gmail.com

 

[fatman17]

That really is rather impressive but as usual we don't really know what other scenarios will be developed in the future - for instance, the main problem they seem to be dealing with is the problem of politicians milking public institutions -- now perhaps bureaucrats will milk these public trusts -- Why is the govt the main or majority owner of these companies?? What major or even minor success can the government of Pakistan point to, that may give us some confidence in her management of such entities??

Beyond the problem of political patronage and the associated mismanagement, the real problem is that exploration has not been economically or financially, significant -- Why is this?? Does the technology not exist in Pakistan? - - It really is a bit of a mystery to me.

i dont know whats impressive about this - what you will see is the appointment of 'hamara banda' (our man) which will be without 'merit' and the cycle of corruption and nepotism will continue.

 

[All-Green]

That really is rather impressive

Dear Muse
I guess the word you are looking for is dramatic...
Till the day technocrats are not appointed as advisers and architects of such grand schemes, there is no chance in hell for it to work.


BTW, one thing you have to say of Zardari...he is a CARE BEAR...when it comes to his friends...

 

[fatman17]

Dear Muse
I guess the word you are looking for is dramatic...
Till the day technocrats are not appointed as advisers and architects of such grand schemes, there is no chance in hell for it to work.


BTW, one thing you have to say of Zardari...he is a CARE BEAR...when it comes to his friends...

Dr.Asim Hussain appointed 'energy advisor' and the 1st statement he makes is that we must import CNG/LNG - hint hint !!! (the defunct $25B french deal.......kickbacks galore!!!)

 

[All-Green]

Dr.Asim Hussain appointed 'energy advisor' and the 1st statement he makes is that we must import CNG/LNG - hint hint !!! (the defunct $25B french deal.......kickbacks galore!!!)

Here is his bio data...clearly showing no relevance whatsoever to his role of energy advisor.

http://www.pid.gov.pk/bio data Dr. Asim Hussain 17-4-2011.doc

BIO-DATA OF DR. ASIM HUSSAIN, NEWLY APPOINTED
ADVISOR TO THE PRIME MINISTER ON
PETROLEUM & NATURAL RESOURCES
Born at Karachi in 1953, Dr. Asim Hussain was educated in the Karachi Grammer School, Cadet College Petaro, Dow Medical College Karachi and in Europe. He is the grandson of Dr. Sir Zia ud Din Ahmed. Dr. Sir Zia ud Din Ahmed (1877-1947) was an outstanding and versatile educationist and political figure.
Dr. Asim Hussain has also previously served as Advisor to the Prime Minister on Petroleum & Natural Resources and Chairman of the National Reconstruction Bureau (NRB) with the status of a Federal Minister.
Dr. Asim Hussain is the owner of Zia ud Din Group of Hospitals which is the largest group of Pakistan functioning under Dr. Zia ud Din Trust. The hospitals provide the latest medical treatment and care en affordable rates for every citizen of the country. In recognition of his invaluable contribution to the country, Dr. Asim Hussain was conferred the award of Sitara-e-Imtiaz on March 23, 2005. As President of private medical university association of Pakistan, Dr. Asim Hussain has upheld the highest standards of professional conduct leading to increase cooperation between the government and private sector of Pakistan.
A visionary with a profound sense of service, Dr. Asim Hussain has set new standards for young professionals to emulate in the quest of creating a welfare oriented social sector.