As a testament of Pakistan’s time tested friendship with China, Prime Minister Nawaz Sharif has flown on his first official foreign trip to the neighboring country. The agenda is likely to remain simple and a follow up on the Chinese premier’s recent visit to Pakistan. The Pakistani PM is expected to seek Chinese assistance in developing infrastructure projects across the country to overcome the persistent energy crisis and sluggish economic progress.
In a bid to find answer to the country’s woeful energy crisis, Nawaz Sharif had recently urged the state-owned China North Industries Corporation (NORINCO) to install solar power plants and also explore other opportunities in Pakistan. After the official visit, he is expected to formally announce a national energy policy to counter the country’s crippling energy crisis. The new energy policy will focus on changing the energy mix of Pakistan and gradually phasing out subsidies in the power sector. The issue of power subsidies also came under serious discussion in fresh loan talks between Pakistan and IMF. The democratically-elected government will be consulting provincial governments and federal units on the matter to ensure their buy-in and full cooperation in achieving objectives of the newly developed policy.
While details of the plan are yet to be unveiled, the energy policy is being touted as a “panacea of Pakistan’s energy ills” by the new government. The authorities must pursue prudent and consistent policies to rescue Pakistan from the shadows of darkness. Despite international pressure, the government should push ahead with the plan to import gas from Iran as it serves the best national interests. Any shift in direction to import electricity from India and Tajikistan could prove unsustainable and not provide a long-term solution to the energy crisis in Pakistan. Considering the historically bitter relationship between India and Pakistan, any dependence on it for electricity may not be a wise decision.
The energy plan should consider short, middle and long-term polices to curb the menace of load shedding across the country, which has severely hit industrial output and hurt economic progress.
Based on recommendations from various experts, the energy policy is also expected to encourage the production of electricity through alternative resources, such as water, wind, biogas and coal. Measures on war-footing must be taken to set up coal and LNG import terminals, and explore the vast potential offered by Thar coal reserves. Further, as promised in the election manifesto, the government should reform the power distribution sector and other regulatory bodies to overcome bureaucratic hurdles. Recently, the government has also tried to eliminate the issue of circular debt, which has plagued the power sector and adversely impacted power generation by private sector players in the country.
According to the Finance Ministry, all dues of the private sector power producers will be cleared by July, resulting in a 25 percent reduction in load shedding. However, the government needs to take concrete steps to correct the circular debt cycle by cutting down line losses and improving the bill recovery mechanism. By resolving the problem of circular debt, the government will be able to win investor confidence in the power sector and increase power generation capacity to end dark times in Pakistan.
