Mr Akhtar Ali, Member Energy, Planning Commission of Pakistan recently spoke with BR Research on matters related to different aspects of energy issues in Pakistan. He is an eminent energy expert. He has authored a number of books on energy policy, investments and tariff issues. He is a visiting Professor of Energy at IoBM and teaches energy management. He was also a Research Fellow Energy at Harvard University's Kennedy School of Government. Besides academic sector, he has also worked as a Chief Executive Officer of Proplan Associates; Managing Director, Karachi Pipe Mills; General Manager, Heavy Mechanical Complex and several other organisations. He has an MS degree from METU Turkey, and BE from NED, Karachi.
<B>BRR: Tell us about the role of the Energy Wing in the Planning Commission.</B>
<B>Akhtar Ali:</B> The Planning Commission has three roles; one is to approve the PC1s. Sometimes the financial outlay of the provinces for these PC1s crosses the limits; that is where the Planning Commission steps in. Secondly, all ECC summaries come to the Planning Commission, which give its view. PC's third role is planning and advice.
"Planning" has acquired a bad name. Nowadays, the new intellectual regime says that planning smacks of communism. In America, there is no planning at the central level for energy as such. Yes, they have an EIA, which releases reports every month, quarter, etc that makes market projections, so that decision makers have the right kind of data to base their decisions on.
We used to have five-year plans, but that kind of planning is no more. Now the five-year plan is kind of like an advisory plan; it is an indicative document that makes projections. It's more of a forecast than a plan.
<B>BRR: What impact has the 18th Amendment had on integrative planning? Do the provinces have sufficient capacity?</B>
<B>AA:</B> We have meetings on the integrative issues with the provinces. We call provincial representatives. It is more of a consensus building exercise.
The provinces' capacity is very low, no doubt. The 18th Amendment does hinder consensus. For instance, LNG; they want to bring in the CCI and are making it a provincial issue. But RLNG projects have been established on the basis that LNG is imported, making it a federal matter - like oil imports. Oil produced is subject to the province where it is being produced. But the import of oil or any resource is in the federal domain. This is being problematic.
We have to learn to interpret the 18th Amendment. It shouldn't be so extreme as to kill the rights of the provinces, nor should it give them an undue share.
<B>BRR: What justifies the long-term contract of LNG imports? At a time when the world is opting for short-term solutions, particularly when there can be a reversal in Brent prices?</B>
<B>AA:</B> If the price was fixed, then there could be an objection against the long-term contract, because you don't know what will happen to international price. In the contract, the long-term price is linked with Brent crude oil; if Brent goes up, gas goes up. The formula is fixed, not the price.
<B>BRR: What if there's a divorce between Brent and LNG five years down the line?</B>
<B>AA:</B> There will always be competition between LNG and oil. The alternative to oil is gas and vice versa. There used to be fixed oil linkages, but the conceptual linkage can never finish because one is the substitute of the other. Linkage with oil is not a bad thing. This is just a theory that oil linkage with gas will end. It hasn't happened.
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