Prime Minister’s displeasure at energy ministries

The Prime Minister has expressed displeasure at the performance of the energy ministries during a meeting, called specifically for the purpose and decided that yet another meeting would be held during the week. It is unlikely that significant gains would be achieved in the sector in less than a week compelling one to conclude that the energy ministries were simply not prepared to brief the Prime Minister on the status of their reform agenda.

The two relevant ministries are the Ministry for Water and Power, whose portfolio is held by Khawaja Asif with Abid Sher Ali as the Minister of State, while Petroleum and Natural Resources Ministry is held by Shahid Khaqan Abbassi – all three are long-time loyalists of the party leader. To complicate matters further, which account for the responsibility for poor performance of the energy ministries difficult to pinpoint, the chairmanship of the cabinet committee on energy is held by the Federal Finance Minister Ishaq Dar, with the Chief Minister Punjab Shahbaz Sharif visibly playing a significant role as is evident from his numerous visits to China to secure foreign direct investment (FDI) for the energy sector. The prime minister’s selection of personalities to deal with the power crisis as well as their failure to deliver one-and-a-half-years after the PML-N government took over power is considered as the primary reason for the prime minister’s reluctance to meet his own stipulated commitment to the public that voted his party to power: if any of his appointed ministers fails to deliver he would remove them. And while the Prime Minister did hold a couple of meetings whereby he was briefed on the performance of some ministries including energy by the relevant ministers yet there have been no change in portfolios to date.

Be that as it may, there is now ample evidence that while the Sharif administration remains focused on enhancing power generation capacity of the country with a focus on not only exploiting the cheapest fuel available indigenously including hydel as well as coal-powered power plants yet it has not so far focused on improving the performance of the energy sector. It is, therefore, a source of serious concern for the public weighed down by heavy loadshedding during the relatively lower demand winter months that the International Monetary Fund’s fourth and fifth review noted inter-circular debt at around 2 percent of Gross Domestic Product – cited as a major reason for the inability of the sector to operate at full capacity, which is close to total demand during peak summer months.

At the same time transmission and distribution losses due to an obsolete and crumbling transmission system, which has the capacity to bear only up to 15000 MW of electricity according to the retired Secretary of Water and Power Nargis Sethi, leaves one to wonder whether all the generation projects that are the focus of the PML-N government would actually be able to deliver the enhanced generation capacity to consumers.

Of equal concern to the general public is the fact that the PML-N government, like its immediate predecessor, has focused on enhancing taxes/surcharge on energy to minimise the massive subsidies as a component of the 6.64 billion dollar Extended Fund Facility (EFF) from the Fund; though it has to be supported that the government has made the subsidies more focused than ever in the past.

To conclude there is an urgent need for the prime minister to shuffle his energy team and at the same time there is also a need for him to merge energy ministries and functions into one as his party committed in its election manifesto and make one person responsible for the portfolio that would ensure that his output is more easily quantifiable. And in the event of non-delivery he can make appropriate changes well in time.