Energy resources exploitation: need to modernise system with foreign assistance

The US Ambassador, who paid a courtesy call on the Federal Petroleum Minister on August 6, 2007, also reportedly discussed the promotion of energy co-operation between the two countries. Welcoming the Ambassador, the Minister recalled the existing cordial relations, as well as the setting up of the energy dialogue pursuant to the visit of American President to Pakistan last year.
He touched on a number of energy areas including the following: (i) Inviting American petroleum companies to take advantage of attractive incentives in the new petroleum policy for oil and gas exploration and production; (ii) Transferring technology to exploit oil shale and gas hydrates; (iii) Seeking American co-operation for conducting bankable feasibility of the 185 billion tonne coal deposits to be utilised for gasification and power generation; and (iv) Inviting the US companies to invest in the development of LNG and CNG sectors of Pakistan.
Energy has a very wide canvas. On the one end are primary energy resources bestowed by nature to any country, and on the other are energy products in a form ready for use by the consumers. Electricity, oil, gas, coal, and wood are some of the manifestations of energy.
Generation of electricity branches out to hydel, thermal, nuclear, solar, wind, etc, while thermal power, based on the use of fuel, is further sub-divided into furnace oil, diesel, gas based, etc Crude oil, having many varieties depending upon chemical composition, takes numerous forms and yields different products through refining or other processes.
Similar is the case with gas, coal and wood. For convenience of the consumers, energy is transformed from one form to another (at each stage some value is added) and transported by modes such as transmission lines, gas pipelines, lorries, etc to the ultimate consumers.
The use of different technologies for transformation of energy from one form to the other and the management of the whole process has become an essential part of exploiting energy resources. Another dimension is added to the already complicated scenario if the country is deficient in certain primary energy resources and imports have to be made for meeting local demand. Therefore, like energy, the scope of co-operation between friendly countries is very wide and can be in any one or more areas referred above.
There is one Department of Energy in USA. The position is quite different in Pakistan as the energy organisation is fragmented. We have the Ministry of Water and Power dealing with electricity; the Ministry of Petroleum and Natural Resources for oil and gas; and all the Provincial Governments because coal is a provincial subject.
Nuclear power is overseen by the Pakistan Atomic Energy Commission. Besides, there are specialised institutions such as Private Power Infrastructure Board (PPIB), Alternative Energy Development Board (AEDB), the newly established Infrastructure Projects Development Fund (IPDF) and the Long Term Credit Fund (LTCF, originally PSEDF) that handle different aspects of energy-related projects.
Oil and Gas Development Company Limited (OGDCL) and Pakistan State Oil (PSO) play an important role in the exploitation of oil/gas resources and their marketing respectively. National Electric Power Regulatory Authority (NEPRA) and Oil and Gas Regulatory Authority (OGRA) are the two regulatory authorities. WAPDA and KESC are the two electric utilities.
Power Wing of WAPDA has been lately broken into over a dozen generation, transmission and distribution companies, while KESC has been privatised. Therefore, for promoting meaningful energy co-operation with friendly countries, normally matters may have to be sorted out with a number of ministries and institutions.
Pakistan has been using traditional technologies since long for exploiting or processing different energy resources. Expertise in some areas has been achieved through co-operation with friendly countries in the past. Due to various reasons, the speed to acquire modern and more efficient technologies has been rather slow.
The whole system for utilisation of energy resources needs to be up-dated. Weaknesses in areas such as organisational structure, staffing of adequate number of experts in different disciplines, market-based pay and benefit packages, regular in-house training of staff supplemented with foreign training, standardisation of documents and agreements, etc are such that can be improved locally with the strong will of the higher authorities and their commitment to merit and quality in matters pertaining recruitment, compensation, assignments and promotion.
Once this is achieved and sustained for a few years, the country could be in a much better position for meaningful and beneficial co-operation with other friendly countries.
The US and other friendly countries have been offering assistance to Pakistan in different ways for promoting and utilising energy resources. They possibly have an idea of the areas needing further co-operation, and discussion in this regard is welcome.
The friendly countries are urged to offer support to Pakistan in capacity building of its personnel engaged in energy-related areas by measures such as: (i) Training visits to power generation plants, refineries, renewable energy projects; (ii) Training visits to facilities for manufacture of turbines, generators, etc; (iii) Technical Training of personnel for operating various plants and facilities as well as exploitation of untapped hydrocarbon resources in onshore/off-shore areas and interpretation of reservoir studies; (iv) Legal training for the negotiation of agreements: Concession Agreement, EPC Contracts, O&M agreements, Long term Fuel Supply Agreements, Rental Power Generation Agreements, Commercial Power Generation Plants, etc (v) Developing capacity for integrated energy planning including demand forecasts, supply options, prices, etc and the measures to avoid energy/power crises such as witnessed in California State a few years ago; (vi) Guidelines for establishment and financing of energy infrastructure projects; and (vii) Strengthening of institutional and regulatory frameworks.
Pakistan has been taking steps to oblige various public sector enterprises (PSEs) to become more efficient and attain profitability. Under the new policy, the government reportedly has linked subsidies to the preparation and achievement of the financial improvement plans (FIPs).
Support from friendly countries to the PSEs in the areas mentioned above could help in capacity building and achievement of the FIPs. However, the PSEs must realise and concurrently put their own respective houses in order and develop an absorptive capacity for help from foreign friendly counties sought in exceptional cases.
As part of the energy security of the country, the government may also reconsider privatisation of profitable entities, such as OGDCL and PSO. Moreover, the government should embark on a campaign to educate the consumers for energy conservation. No nation can afford to have an unlimited access to energy consumption.
Pakistan has again suffered a big trade deficit in the last fiscal year and the position would not be different during the current fiscal if we do not control our imports, of which energy related imports are quite substantial. Our wants should be tailored more or less to our own financial resources.
Co-operation in energy and other fields may not be restricted to a single friendly country; rather it has to be as wide as possible and practicable. There may be countries that offer only training of personnel while other countries may offer funds for technical assistance. There may be other nations that are in a position to offer soft loans for import of essential plant and equipment.
All these countries may possibly be approached for energy co-operation. Moreover, it is important to demonstrate to all the friendly countries that we have taken full benefit of the on-going energy promotion programmes and now have the absorptive capacity for further co-operation.
Meaningful co-operation between friendly countries should take place in the transfer of know-how and technology for better exploitation/utilisation of energy resources and extensive training for capacity building of the energy related personnel in Pakistan. Moreover, USA may consider supporting Pakistan in various areas considered essential for enhancing energy security of the country. Steps that have the potential to adversely affect energy security of Pakistan might be avoided.
Establishment of Pak-USA joint venture manufacturing companies for producing different sizes of power generation plants and refinery machinery in Pakistan is expected to give a boost to the enhancement of energy security.
The country is facing power outages due to which its exports are adversely affected. Fast track initiatives for handling the power crises in the country are being implemented. The capacity of existing thermal and hydel power units may be enhanced.
Wapda/Pepco (Pakistan Electrical Power Company) is said to initiate or complete the thermal power projects that the private sector initially agreed to build, but later walked away. However, it is apprehended that the fast-track measures would cost a limb to the country and the consumers. Soft loans from friendly countries are expected to reduce the capacity expansion cost to reasonable levels.
The US Ambassador, in her meeting with the Federal Minister had reportedly told him that it was being planned to host US-Pakistan investment conference in the US during October-November this year, which would provide an opportunity to attract US investment in the energy sector of Pakistan.
The two friendly countries may enhance the benefits of this occasion by offering capacity building opportunities to the selected Pakistani participants of the conference by arranging for them training courses/plant visits in USA soon after the conference.