PAKISTAN’S ENERGY POLICY

INTRODUCTION

Energy is going to be the major constraint on economic development in the coming decades. There is not enough realization of the approaching shadows of the imminent predicament in the developing countries in general and in Pakistan in particular. There is very little forward thinking to grapple with the challenge that has begun to engulf us. The conventional wisdom, if wisdom that can be called! provides no real clue towards the solution of the problem. Only the import bill for oil, which provides around 40 per cent of the total energy requirements is costing the country over one and a quarter billion dollars. Gas which provides another 35 per cent of energy is going to last for another ten to fifteen years. Domestic oil production caters for around ten per cent of oil and less than five per cent of total energy needs. Nuclear energy is providing only 1 per cent of energy. The situation is grim and if the country is unable to develop a new and radically innovative strategy to face this challenge, we might be heading towards disaster. In view of this energy scenario the Institute of Policy Studies initiated research on future energy policy.

Our first objective is to make the nation more conscious of the gravity of the problem, and to make her realize that the traditional approach of asking the people to do a little more of all that is being done, is fundamentally defective and deserves to be replaced by an altogether new approach to the energy problem. A radical departure is needed and our well thought out recommendations are that:

1. Dependence on non-renewable energy sources (present supply from this source is around 80 per cent) should be systematically and drastically reduced, by resort to:

a. energy conservation and optimal utilisation through better management and recycling; and

b. Substitution of oil and gas by renewable energy sources.

2. Development of a crash programme for oil exploration and production to achieve optimal level of production over a given time horizon, say five years.

3. A similar programme of expansion and utilization of natural gas for its optimal use for the next decade/decade and a half.

4. Priority to be given to research and development and to the actual harnessing of renewable sources of energy particularly, hydroelectricity, nuclear power, solar energy, and other presently used non- commercial resources of energy which provide about 50 per cent of the energy requirements of the country. New technology would have to be evolved and introduced.

5. Development of nuclear energy and systematic efforts to harness solar energy for household and even commercial uses has to be given priority.

6. Our attitude towards the use of oil and towards continued use of technology based on oil has to change. A major decision is needed to systematically curb the use of oil and oil-dependent technology and to switch over to alternate technologies. As such it is being suggested that energy-auditing should be introduced in all sections of the economy, transport, industry, business and households, and shadow prices of energy should be used in project appraisal to implement a conscious decision to bring about energy (non-renewable) saving or shift towards new technology based on renewable technology. Reduction in energy-intensity should be a paramount consideration in the choice of technology for the future.

7. The time-horizon for planning would have to be changed to take full note of the energy dimension. It is suggested that 15-20-year plan must be made to face the energy challenge. This plan should aim at:

a. conservation and optimal use of present sources of energy;

b. optimal exploitation of oil and gas;

c. Integrated plans of 3-5 years, 5-10 years, and 10-20 years for energy substitution, and for the evolution and adoption of new technology consistent with energy supplies; and’

d. A massive programme of domestic R&D and efforts to import only appropriate technology from abroad.

8. The entire development strategy would have to be rethought in view of the energy constraints and prospects. Although the imperatives of this fundamental exercise are many and extremely pressing particularly in view of the need for self- reliance and ideological orientation, but the energy situation has made this review and re-examination all the more necessary. This calls for a pooling of the national talent at the highest level to work out a new development strategy for the country and to frame a new perspective plan to take care of this and other dimensions. As we visualize the future in the light of these changes, the whole pattern of development of industry, transport, agriculture and household life-style is going to be fundamentally different from the pattern implicit in the Western model of development, which is being consciously or unconsciously super-imposed on our society. A National Planning Council must apply itself to this task on a continuous basis.

9. To create a Ministry of Energy to manage all aspects of energy policy and to evolve and implement a coherent policy in this respect. It is our firm view that energy policy in the coming decades is going to be a continuous process and not just a periodic affair. That is why an efficient and powerful Ministry of Energy would be more qualified to meet this challenge than the four odd ministries and some twelve different directorates, which, in the absence of proper coordinating mechanism, are presently trying to grapple with the elusive problems of energy.

Another alternative, which in our view can only be described as second-best, is to form a high powered Energy Commission directly under the President, in which all relevant ministries and directorates should be represented at the highest level and which operates, not as an Advisory Council, but as the highest policy-making body, with an effective wing for monitoring implementation and bringing about coordination between different agencies.

10. A working Group be formed to develop a workable scheme for an Energy Fund for the Third World countries in general and the developing Muslim countries in particular to be managed by an Islamic International Agency created by the Organization of Islamic Conference and OPEC with a view to meet the genuine oil needs of the Muslim and developing countries on the one hand and to finance R&D for inter-energy substitution from nonrenewable to renewable sources of energy and the introduction of new technology in these countries.

The above points contain the substance of our recommendations and constitute guidelines for a new energy policy.

The present study has been produced for the Institute of Policy Studies by Mr. Saeed Ahmed Rashed, who has a vast experience of research and administration in education and government. He has put in hard and painstaking labour this research and has come out with a study which is comprehensive in its breadth and original in its flavor. The work on the subject continues and results of further research would be shared with the nation as and when possible. I hope this study would be read without any prejudice and the policy-makers would try to benefit from its insights. KHURSHID AHMAD