Dr Hussain, an orthopedic surgeon and a healthcare businessman, is back to managing everything oil and gas. He is currently serving as the Minister for Petroleum and Natural Resources, a portfolio he left in August 2009. Dr Hussain served as Chairman of National Reconstruction Bureau from May 2008 to November 2009.
He is also a member of various cabinet committees, including economic co-ordination, privatisation, investment, and energy. Dr Hussain is currently the President of Pakistan Association of Private Medical and Dental Institutions, Association of Private Universities & Institutions and Pakistan Nursing Council. He is also the Chairman of the Board of Governors, Ziauddin Medical University, and a member of the Executive Committee of Pakistan Medical & Dental Council.
In this interview, with BR Research, Petroleum Minister, Dr Asim Hussain Hussain hinted at a possible solution of Pakistan's energy woes by 2014 as he is hopeful of local and imported gas to enter the national grid. Hussain also hints at prioritising natural gas usage and deregulation of the petroleum sector as per the industry's demand. The following are edited excerpts.
BR Research: A lot of circles have been of the opinion that there should only be a central ministry of energy to enhance co-ordination - what is the government doing in this regard? Asim Hussain: Everywhere in the world they have a central ministry of energy and I can assure you that there is a lot of thinking process going on within the government right now and this is one of the many issues in the energy sector that we are looking at. It will ultimately be upon the cabinet to decide how to go about it, but we can certainly not reinvent the wheel.
BRR: Are there any plans to further deregulate the petroleum sector as per the industry's demand?
AH: We are completely committed to deregulating the petroleum sector. We only have one product that is regulated, which is diesel. Once completely deregulated, the smaller OMCs will have no margins to play with, either they will pack up or they will have to merge, unless they create the infrastructure for storages. BRR: Every now and again, we see petroleum shortages across or in some parts of the country which exposes the nature of our strategic reserves. Isn't it a case of sheer mismanagement?
AH: The OMCs were getting payments with a delay from the government on the price differential claims, which is why there were not importing petrol working on very thin storage and once that broke, we saw the shortage.
There are three problems in it. One is the OMCs themselves, as they don't import it. Secondly, they don't have adequate storage and thirdly we don't have enough refining capacity.
BRR: Why aren't the OMCS importing?
AH: There are two reasons, number one is circular debt and second is storage. The regulator should only provide license if the applying party has the storage.
We must keep in mind that we are not providing the OMCs with good enough margins to let them counter inflationary pressures. The world works on an international formula, we work on a subsidy formula, we want to follow that formula but there is a lot of public and political pressure.
BRR: What is the government doing to discourage the abuse of natural gas especially in the domestic circuit?
AH: We are working on different proposals. In my opinion, the CNG policy was a flawed one and it should only be used for public transport so that the masses get the advantage instead of the affordable class. We should substitute natural gas with LPG in the domestic sector.
BRR: Isn't increasing gas price is one option to discourage domestic consumption on such a scale?
AH: There are certain political considerations as well. To raise the gas price in one go is very difficult, we will go in phases. We will bring CNG to 55 percent petrol price parity this fiscal year. The parity currently stands at 45 percent. We must rationalise the usage and prices, but unless we get the alternative source of energy, we cannot cut short the supplies.
By next year, lot of our gas shortage problems will be solved; we will have both LPG and LNG available. We will have the LNG before June next year. We are expecting 600 mmcfd from Zin block in the next two years as well. If things go well, we will see a good period after July 2012 - there is certainly light at the end of the tunnel.
Out of the gas shortfall, one billion cubic feet will be met through LPG and LNG. We have also started working on Tight Gas, which will take two-three years to complete.
BRR: So, a lot of energy problems will be solved by 2014?
AH: Yes, provided that we set our own goals right and we end this subsidy culture soon.
BRR: The refinery sector has performed well below capacity for long - what are the reasons and what is the government doing to address the issue?
AH: Firstly, the refiners don't get anything for refining in their formula. The only thing good for them is the deemed duty. Now after petrol margins increase, the refineries have agreed to upgrade their standards to the Euro-II level by 2014.
BRR: How do we deal with the circular debt issue?
AH: Unless you don't fix your electricity distribution system, circular debt will continue to be there. Unless you create a sense of competition amongst disocs, the country will continue to face this problem. You need a generating company, a bulk distribution company and a local distribution company.
BRR: How do we deal with the energy crisis on war footings?
AH: The main issue is again the circular debt. If I import LNG of say $50 million and give it to the power plant and it and the power company does not pay me back, how will I get the next shipment?
BRR: How will you manage the gas load between the fertiliser industry and the rest of industries?
AH: We will run it in a cycle - we will curtail both the IPPs and fertiliser in a cycle. It will be a hard affect, but a balanced one.
An interview with DR. ASIM HUSSAIN
Interview by Hammad Hussain
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