Dr Iqtidar Cheema
FULL MEMBER
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- Dec 27, 2014
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Pakistanis are facing one of the worse oil and gas shortage crises which has crippled the life of many in the country. Prime Minister Nawaz Sharif who is famous for his international tours has canceled his planned tour to Switzerland. He definitely wouldn’t like public to be on the streets once again, protesting against his government. Media is consistently showing the long queues of the public at the petrol and gas station. Minister for Petroleum, Shahid Khaqan Abbasi reported on 21st January that Pakistan has left with only 10 days of oil reserves short of the 20 days.
The current oil and gas crises is a clear matter of poor governance and bad management as the Ministry for Power and Water failed to pay Pakistan State Oil an outstanding debt of 171 billion rupees ($1.7 billion), to import the oil for two months. The fuel shortage has also led to a major decline in electricity generation, causing daily power cuts of more than 12 hours that severely restrain the manufacturing and service sector. The persistent energy crises of the country has adversely affected the national economy. Industrial production has been severely hit; and also triggered social unrest which sometimes turns violent thus, creating law and order problems in many urban centres in the country. According to one estimate energy crises have resulted in an annual loss of about 2 percent of GDP. One of the recent studies suggests total industrial output loss in the range of 12 percent to 37 percent due to power outages.
The Gas shortages will definitely prompt an increase in oil imports, which in turn will both increase the inflationary pressures and the budget deficit. The government has previously estimated that over $15 billion are required to meet the country’s immediate energy needs, and at least twice of this is needed for its longer-term energy plans. A Washington DC based Federal Institute which was proudly visited by the Prime Minister Sharif in October, 2013 has reported that Pakistani Domestic oil and gas supplies are forecast to be exhausted by 2025 and 2030 respectively. The institute has also suggested that Pakistani energy imports could rise to as much as $38 billion by 2015–16 if there is a failure to take action to increase indigenous resources.
It is about time that Pakistani government should work on an effective energy policy. Pakistan has a national energy policy, but it is unresponsive, only partially implemented and implementable, and at the mercy of competing bureaucratic interests. Overall, the sector is poorly managed, exhibiting considerable institutional overlap and poor capacity, a situation that has become more evident as the energy situation has deteriorated. Six ministries and forty-two agencies are involved in Pakistan’s energy policymaking and provision. Successive administrations have added task forces, created special adviser posts, and one-off commissions. But unfortunately, the scale of the problem has now grown beyond any immediate solution. In the last ten years there has been no substantial exploration of energy reservoirs. The government should now act timely and every potential project needs to be initiated to ensure the development of hydropower, wind power, nuclear power, and coal reserves and biomass for the national energy supply mix.
The current oil and gas crises is a clear matter of poor governance and bad management as the Ministry for Power and Water failed to pay Pakistan State Oil an outstanding debt of 171 billion rupees ($1.7 billion), to import the oil for two months. The fuel shortage has also led to a major decline in electricity generation, causing daily power cuts of more than 12 hours that severely restrain the manufacturing and service sector. The persistent energy crises of the country has adversely affected the national economy. Industrial production has been severely hit; and also triggered social unrest which sometimes turns violent thus, creating law and order problems in many urban centres in the country. According to one estimate energy crises have resulted in an annual loss of about 2 percent of GDP. One of the recent studies suggests total industrial output loss in the range of 12 percent to 37 percent due to power outages.
The Gas shortages will definitely prompt an increase in oil imports, which in turn will both increase the inflationary pressures and the budget deficit. The government has previously estimated that over $15 billion are required to meet the country’s immediate energy needs, and at least twice of this is needed for its longer-term energy plans. A Washington DC based Federal Institute which was proudly visited by the Prime Minister Sharif in October, 2013 has reported that Pakistani Domestic oil and gas supplies are forecast to be exhausted by 2025 and 2030 respectively. The institute has also suggested that Pakistani energy imports could rise to as much as $38 billion by 2015–16 if there is a failure to take action to increase indigenous resources.
It is about time that Pakistani government should work on an effective energy policy. Pakistan has a national energy policy, but it is unresponsive, only partially implemented and implementable, and at the mercy of competing bureaucratic interests. Overall, the sector is poorly managed, exhibiting considerable institutional overlap and poor capacity, a situation that has become more evident as the energy situation has deteriorated. Six ministries and forty-two agencies are involved in Pakistan’s energy policymaking and provision. Successive administrations have added task forces, created special adviser posts, and one-off commissions. But unfortunately, the scale of the problem has now grown beyond any immediate solution. In the last ten years there has been no substantial exploration of energy reservoirs. The government should now act timely and every potential project needs to be initiated to ensure the development of hydropower, wind power, nuclear power, and coal reserves and biomass for the national energy supply mix.
