Instead of being the driving force, public sector oil and gas companies have become the Achilles heel of the countrys economy. The mushrooming inter-corporate debt between these and other companies doesn only limit their ability to expand, but it also threatens their economic viability.
Such is the state of affairs in the energy sector, that PSO - the countrys biggest oil marketing firm - was vociferously requesting the government to release Rs60 billion to save itself from certain default even as newly inducted advisor to PM on petroleum and natural resources, Dr. Asim Hussain, told media about grand plans for the long-term development of this sector.
Nothing short of sweeping reforms will deliver these companies from their shared conundrum; and sweeping changes are just what the doctor has ordered. The first prescription entails the removal of all chief executives along with the members of the boards of directors of PSEs in oil and gas sector.
Until last evening, no official notification had been received by OGDCL, PPL, PSO, SSGCL or SNGPL, regarding the removal of these officers. But following Dr. Asims press conference on Monday, it is obvious that "they are all going".
Quite naturally, the offices of all the relevant public sector enterprises were abuzz with discontent after the revelations of the advisor. "The circular debt issue was not created by any single individual, nor can it be resolved by a change of faces at the top of these companies," an official at Pakistan State Oil told BR Research.
"What is needed is a mutually agreed procedure for bringing down the outstanding receivables between public sector companies," the official added. "There is no point in taking such a bold step if these vacancies are to be filled with political appointees" commented an official from a rival oil marketing company.
Given the dismal state of the energy sector and the governments habit of making political appointments every now and then, the lack of enthusiasm over Dr. Asims statements is understandable.
However, the decision to exclude both secretary petroleum and federal petroleum minister, from the boards of these companies is a welcome change. Dr. Asim also asserts that the government may recruit individuals from other countries in order to ensure merit-based appointments.
Still, perhaps one of the early indicators of the advisors resolve to deliver the country from the energy crisis may be gauged from his handling of regulatory bodies such as Ogra.
Ogra has been marred with scandals, the most recent of which is the request for an extension in the services of controversial member finance, Mir Kamal Mari. Dr. Asim will do well to distance himself from individuals that lack credentials or credibility in Ogra and other related bodies.
As winds of change breeze through the various PSEs, time is also ripe for the reconstitution of the ministry of petroleum and the ministry of power.
The government should merge the portfolio of power into the ministry of petroleum and natural resources while spinning of the ministry of water as a separate portfolio. This change will help reduce bureaucratic red tape that has thus far exacerbated the flow of funds between oil and gas companies and power distributors.
It will be months before the full course of remedial measures needed to reform the sector can be administered. It remains to be seen whether the good doctor will stick around to nurse the public sector enterprises out of choking on their own outstanding receivables, or, if nepotism prevails, make an early exit similar to his previous stint as the advisor on petroleum.
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