This state of affairs clearly shows the people's desperation or recklessness arising from their helplessness. They have legitimate hopes that Nawaz would bring to an end or at least significantly mitigate in the shortest possible time the relentless severity of electricity ordeal that they have been facing for several years.
Faced with a dauntingly complex problem of power outages, the Sharifs are expected to typically do logical things to resolve it as early as possible. Unfortunately, however, this is one of those issues that have no quick fix. What will he possibly do when the power shortfall hovers around 7,000 megawatts, nearing the overall amount of electricity generated through furnace oil, natural gas and river flows?
The same goes for the natural gas. While an ever-increasing electricity shortfall makes life of people in all parts of the country quite miserable the gas demand-supply disequilibrium becomes more and more menacing as the demand for this precious natural resource in Balochistan, Punjab and KP quadruples in winters. Its highly irrational availability as a fuel for automobiles has only worsened the natural gas crisis in the country.
Not only is Nawaz, therefore, required to take charge of the country as early as possible for an all-pervasive electricity load shedding issue, he is expected to take some immediate but concrete steps towards seeking to solve gas shortage problem by acknowledging the naked fact that there is a supply of only 4 billion cubic feet per day (bcfd) against the total demand of 8 bcfd, creating a whopping shortfall.
IP gas pipeline
The Iran-Pakistan Pipeline (IP) gas project is a major breakthrough in the realm of energy security but this will not be good enough to resolve the energy crisis faced by the country. Will the successful completion of IP project mean that the energy crisis has been finally solved? Unfortunately, the answer will be a categorical no. Consider:
Not only will the IP project be like a success long haul or a painfully prolonged effort or a task premised precariously and hinged horrendously on the vagaries of geostrategic preferences and interests, there will still be a severe disequilibrium because this would add only 750mcfd to the national supply line.
The PML-N knows quite well that it would be required to deliver anytime soon. That the question whether this government will be able to effect a significant cut in the load shedding durations in the months of June, July and August will find no easy answer is a stark reality if the PML-N chief is willing to look it in the eyes.
Nawaz, who has successfully cashed in on the opportunity of taking advantage of growing popular discontent with the PPP-led coalition government over power outages, knows the first thing about his job. He is said to have tasked country's top entrepreneurs and professionals such as Mian Mansha and Shaukat Tarin to help find a solution to the energy situation that will be highly critical to his own government's future.
These two men who are widely known for their integrity and acumen will be required to see the larger picture. In other words, they will be expected to see the situation from all angles and know how and why things work the way they do. They must know that providing universal access of electricity to the entire population even during the entire five-year span of the PML-N government will be a task unachievable. They need to realize the fact that the entire trade and industry sector that has gleefully welcomed PML-N victory will lose no time in bitterly lamenting its disappointment if this critical segment of any country's economic prowess or weakness does not see a marked improvement in the energy supply position. They also need to know that no foreign investor will be willing to set up a power generation unit in the virtual absence of gas and uncertain presence of furnace oil supply. It is needless to say that no independent power producer would like to make direct imports of furnace oil, to make payments in dollars.
A massive untargeted subsidy on electricity strongly contributes to the country's fiscal deficit while a concomitant liquidity crunch badly mauls the efficiency of Gencos and Discos. Financial woes stemming from circular debt adversely affect the ability of state-owned mega corporation PSO, to make furnance oil imports. The crisis has been worsened by government departments and influential people that do not pay bills. A vicious cycle in power sector has left the circular debt with a painful swelling all over its body.
While hydroelectric projects have no bright prospects mainly on account of heavy investment, ecological and environmental issues and long gestation periods, a growing reduction in gas supply due to lop-sided priorities spelled out by the Gas Distribution Policy and government's alarmingly stunted ability to freely spend foreign exchange from country's fast depleting reserves on the import of furnace oil for thermal power generation are also an equally difficult prospect.
Moreover, all the right noises in relation to building up pressure on the US to also cut a nuclear deal with Pakistan should come to an end because of the fact that India's nuclear power potential has been seriously stymied by political activism since the Fukushima disaster in Japan.
In spite of the fact that the resolution of average gas and electricity transmission and distribution losses requires a period of time sufficient for factors to work themselves out, the gains made through this modest, however worthy, initiative will not be enough to markedly help plug the existing power-supply gap.
Importing electricity is often cited as a solution to the problem. Iran, which currently provides about 75mw electricity to Pakistan, has agreed to provide an additional 1,000mw in four years. But this deal offers hardly any solution because not only has the future of existing power supply to Pakistan come under serious doubt on account of stepped-up US and EU sanctions on Iran, the present Iran-West stand-off casts shadows over the prospects of energy imports from the Islamic Republic.
There exists no chance of buying electricity from India because not only is our eastern neighbour itself electricity-deficient at this point in time, it will seek to make such arrangement only in return for gas supplies from Pakistan. Do we have enough gas for a barter deal? As far as the prospects of gas and power imports from Central Asian countries are concerned, a highly destabilised Afghanistan continues to play out as a huge obstacle.
Possible solution
Policy reformulation with greater emphasis on reprioritisation of gas allocations to different sectors and rationalisation of electricity and gas pricing, development of LNG facilities and infrastructure together with intense efforts aimed at inducing foreign investors with most lucrative deals embedded under constitutional protections can be a solution, albeit long-term, to energy problem.
Last but not least, Iran, a country endowed with massive proven oil and gas reserves, has been finding it extremely difficult to develop more fields to meet its growing energy, particularly gas, needs because international sanctions have drastically slowed the progress across its entire energy sector through a profound lack of upstream investment in both oil and natural gas projects. In other words, Iran's energy woes show the criticality of foreign investment in its energy sector. In a nutshell, the future of Pakistan's energy security hinges on one word: investment.
The writer is newspaper's News Editor. He is member of the American Economic Association (AEA)