The turmoil in the world energy market triggered by the Russia-Ukraine conflict has exposed Pakistan’s vulnerability to fuel supply disruptions and price shocks as we meet roughly 50% of our energy needs via imports, mainly oil, LNG, and coal. Last year, these imports cost us about 27 billion dollars which could rise even further in the future. This poses serious risks to our economy, defense, and society. Naturally, the government has sprung into action and is deliberating on multiple options to alleviate and, if possible, eliminate these risks.
As over 35% of the fuel imports go to power generation in the country, the power sector seems to be the prime focus of the government’s efforts to reduce this dependence. These efforts include fast-track solarization and electricity saving by closing commercial markets and businesses early and moving to more-efficient appliances such as fans and lights. Useful and necessary as they are, these efforts alone will not be sufficient to eliminate these risks. The government will need to broaden its scope of reforms much more to ensure energy security which at present revolves mainly around diversifying and indigenizing primary sources for power generation.
For a host of reasons, including lack of resource endowment, technology limitations, locational issues, and economic and financial constraints, total indigenization may not be practicable or even economic. Energy infrastructure is also capital-intensive and long-lived, and once in place, locks a nation into supply and consumption patterns that cannot be altered quickly and without heavy costs. Therefore, instead of quick fixes or fast-track solutions, the government will need to pursue a vision-led comprehensive set of reforms to secure energy and power supplies for the nation.
Pakistan was not born with imported fuel dependencies. This noose was put around our necks via the private power policy of 1994. It was further tightened by our successive governments’ refusal to let go of their tight political control on power sector entities and their consistent failure to entrust the management of these entities to capable, competent, and independent hands. Thus, over time, these chains of dependence have become so strong that now they resist and defy any effort by our governments to untangle them.
Pakistan’s policymakers are not unaware of the criticality of energy security and have been striving to make the country energy secure. National Electricity Policy 2021 identifies energy security among its three primary goals. Section 3.2: Energy Security states, “The goal of the Government is to diversify the fuel mix of the generation capacity in the country, by optimal utilization of energy resources, such as hydro, renewable sources, indigenous coal, natural gas, and nuclear.” This is a restrictive view of energy security, as we further elaborate below, and will require broadening to include its other dimensions also.
Energy security for a country is generally understood to mean the availability of uninterrupted energy supplies at affordable socio-economic and environmental costs. It bases on the following four threads: (i) availability—the ability of a country to secure its energy needs by having an extensive commercial market and sufficient physical resources, investments, technology, systems, and legal frameworks in place; (ii) reliability—the extent to which energy services are protected from disruption through diversification of sources and supply chains, resilience to handle shocks, and recover from failures; (iii) affordability—low and equitable prices relative to income and their stability over time; and (iv) sustainability—minimal socioeconomic and environmental damages that can result from the energy system.
Energy and power sector policies are to play a fundamental and decisive role in managing the transition of the country to a secure energy future for its economy and people. These sectors, and the power sector in particular, suffer not from a lack of policies but from a surplus of them. The majority, however, is parochial disjointed, fragmented, and inconsistent, often at odds with each other. The government will need to review this situation critically and improve the existing policies to make them inclusive and mutually consistent.
We have seen a streak of policies since 1994, introduced at regular intervals by our successive governments to attract private investment, mostly for power generation projects. These policies, however, failed to deliver their intended results and in fact, have led to serious unintended consequences like excess capacity, suppressed demand, runaway circular debt, shifting of businesses to other countries, and punishingly high rates.
After assuming office in April 2022, our new coalition government seems quite keen to add its own share to the country’s power policy galore. It’s forming multiple task forces to seek reforms in specific areas. Energy policymaking, however, is too serious an undertaking to be left to task forces composed of representatives from ministries and other entities as a part-time job. Such efforts did not succeed in the past and may not work this time also. Members of these task forces may be well-meaning, dedicated, and sincere, but they just don’t have the requisite expertise and skills that such tasks demand.
Energy policymaking is a complex, multi-faceted, and highly-specialized area, and requires a team of capable and experienced professionals who have a good grasp of the diachronic nature of global energy markets, continuously evolving technological trends, complexities of the global energy resources distribution, and geopolitical dynamics and sensitivities around these issues. It is a specialized job and, therefore, must be left for the specialists to handle.
The government should institutionalize the policy formulation and implementation process by making it transparent, objective, and consultative. Every proposed policy must be screened through specified and objective criteria such as efficiency, cost-effectiveness, and distribution of its costs and benefits among stakeholders. Specifically, the compatibility of the existing institutions for effective implementation of the intended reforms through these policies must not be overlooked.
Efforts should be made to set a clear hierarchy among different policies, from top national down to local ones. It should be ensured that the policy for a specific sector of the economy guides those in its subsectors. Our governments have been following a reverse order instead and have issued sub-sector policies first, for instance, ARE Policy 2019 and Electric Vehicles Policy 2019, then the National Electricity Policy 2021. Relatively new to join our energy policy portfolio are fast-track solarization, local manufacturing of solar panels, and energy conservation.
Consistency and continuity of a policy is as important as the policy itself. Not in Pakistan, however, as before a new policy is fully grasped by the stakeholders, a new one is churned out by a new government, leaving them and others totally perplexed. Consistency of policies among the major sectors of the economy and sub-sectors and their stability over time are two prerequisites for converting the strategic vision of our leaders into reality as they will raise investors’ confidence, reduce risk perceptions, and increase investment flows.
The existing policies should be reviewed critically and improved to encourage the deployment of distributed, and particularly renewable, energy resources and discourage mega projects, especially those based on foreign technologies and fuels. These policies should also encourage the deployment of storage technologies in the system to enhance the value of renewable energy technologies while relaxing their intermittency and variability constraints. Similarly, besides being a source of demand, battery packs in EVs can also support the power grid in more economical ways than traditional solutions.
While new threats continue to emerge within and around our borders, new opportunities also evolve that we can use to reduce our dependence on imported fossil fuels. We must be ready to review our energy security challenges afresh and periodically also since it is a critical link to our national security and independence. As Thomas Jefferson had aptly observed, “The price of liberty is eternal vigilance.” We must be ready to pay this insignificant price to guard our liberty and independence.
The writer is a freelance consultant specializing in sustainable energy and power system planning and development. He can be reached via email at: firstname.lastname@example.org