PakistanTowards a new Energy Policyten point agendaFPCCI Roundtable conference on Energy16th May 2013,KarachiByAkhtar AliCEO Proplan Associates Karachi
Ten Points• Institutional issues• Market, competition and costs• Consumer Choice &market aggregation• Reorganize distribution• Gas Production and imports• Gas usage and priority issues• Thar Coal development• Renewable Energy• Resolve political issues
Institutional issues• 1) Integrate energy decision making avoidingthe pitfalls and predicaments of similarinitiatives like one-window operations of thepast; ministry consolidation or Chief EnergyAdvisor with multi-ministry jurisdiction;reorganize and transform all major energyinstitutions into out-put based organizations
Market, competition and costs• 2) Reduce cost of production and at-least arrestthe rising cost escalation; introduce competition;make regulation and control an exception andmarket and competition a norm; Except fortransmission and distribution, both in Gas andelectricity, introduce auctions and tendering inplace of cost-plus projects; introduce Coal andHydro to bring down prices. Keep 10 cents perkWh ceiling on all new projects, and a ceiling of10 USD per MBtu on Gas prices, imported or local.
Consumer Choice &marketaggregation• 3) Encourage large consumer choice, selfgeneration and market aggregation(wholesale power marketing companies);Introduce and strengthen wheeling chargeapproach in both Electricity and gas sector;include IPPs and Captive generation insubsidies as well.
Reorganize distribution• 4)Re- organize distribution companies smaller andeventually Wires only; similarly, gas T&D assmaller ‘Pipes-only’ businesses. Divide gas andelectricity distribution into smaller units andorganizations, possibly division based;Provincialise distribution companies; introduce atwo-Boards system in large companies ala-Europe; launch an extensive programme for T&Dloss reduction both in gas and electricity;establish separate organization(s) to undertakethis.
Gas Production and imports• 6) Reform OGDC and Oil and Gas concessionunits; launch a major political-cum-commercial package to boost local explorationand production of gas; consider upwardsadjustments in whole-sale/producer gasprices in view of very high imported gas pricesin LNG and Iran Gas; Avoid expensive gasimports projects; Balance American vs Iranianinterests and get a favorable LNG supply fromthe U.S. or better prices of Iran-pipeline gas.
Gas usage and priority issues• 7) Mandate efficient use of scarce gas and expensive whenimported; promote and incentivize cogeneration and eventri-generation using waste heat heating and cooling andrefrigeration for food processing industry. Discourage CNG;close the price differential to 75% in terms of Btu prices;encourage public transport on CNG; immediately ban CNGuse in larger than 800 cc private vehicles; encourage andintroduce Bio-CNG; put other gas wasters to notice such ascaptive generators who are illegally running single cyclefacilities violating their terms of license; Gas allocationpriority to be homes, then power and then industry(Boileruse);Fertilizers to be converted to coal in 5 years and CNGat the last priority to be eventually phased out, unless Bio-CNG is adopted by the pumps.
Thar Coal development• 8) Fast Track Thar Coal and launch atransaction for 5000 MW of Thar Coalimmediately; Fast track conversion of GENCOsto Coal, local or foreign or both; convert DieselEngine IPPs to Biogas where feasible; givenotice to Fertilizer plants to convert to Coal(Thar); organize Coal Gasification project in amore structured way, inviting foreigncompanies which can utilize the data alreadygenerated
Renewable Energy• 9) Promote competitive Renewable energy that can beafforded and improve supplies; Launch 300-500 MW WindPower Auctions every six months and try to halve the WindTariff from 16 cents to 8 cents or less; encourage localcontent; Launch solar power schemes for diesel replacingapplications e.g. Tube-wells; Organize a IPP for thispurpose; organize auction for Solar PV for tube-wells with areserve ceiling at 15-16 cents; promote solar water heatingand cooling; negotiate green credits for renewable energyfrom multilateral and bilateral sources mortgaging CDMincomes; prepare national CDM projects scheme;encourage Bioenergy such as Biogas, Bio-CNG and energyfrom solid and liquid waste;
Resolve political issues• 10) Resolve political issues pertaining toenergy sector; a) Hydro and Coal royalties; b)provincial role in energy sector; possiblyprovincialising distribution; energy quotas,priorities and allocations; subsidy allocations;apportionment of sovereign guarantees forenergy projects implemented by provinces.
About the authorAkhtar Ali is an engineer (B.E, M.S.) energy consultant, advises public and private sector clients on energy policy,investments and tariff issues and has authored a number of books on the subject. He has been a visitingProfessor of Energy at IoBM and teaches energy management to MBA students. He has held seniormanagement appointments in Pakistan’s public and private sector. His last appointment in public sectorwas as Chief Executive, Karachi Pipe Mills, a unit of State Engineering Corporation. He was Research FellowEnergy at Harvard University’s Kennedy School of Government. His professional career spread over morethan over three decades includes management consultancy& training and company management. He is anauthor of eight books on various subjects such as energy, governance, political economy and resources. Heheads Proplan Associates, a consulting company having a current focus on Energy. He is also Chairman(REAP) Research on Economy and Politics of Pakistan, a think tank that brings out research publications onnational issues.Books by Akhtar Ali:• The Political Economy of Pakistan: an Agenda for Reforms. (1994).• Pakistan’s Development Challenges :Federalism, Security and Governance 2010• Pakistan’s development; economy, resources and technology,2012.• Pakistan Nuclear Dilemma: Energy & Security Dimensions. (1984).• Pakistan Energy Development: the Road Ahead.(2010).• Pakistan Issues in Energy Policy, 2012.• Nuclear Politics and Challenges of Governance. (1998)• South Asia: Nuclear Stalemate or Conflagration. (1987).• Proplan Associates, Karachi, Pakistan:tel,0213-5845359, Mob;0345-2447714;email@example.com