Pakistan revises its energy prices on a fortnightly (fuel, LPG and LNG), monthly (power) and biannually (gas) basis. This habit needs to be replaced by an approach that smoothens the impact of changes in prices and reduces the risk without causing political despair every fortnight, month and six months.
The review of tariff adjustments by ‘Business Recorder’ BR highlights that it is manageable. Starting July 2024, the plan to rationalize tariffs with a reduction in government intervention necessitates empowering Ogra and Nepra and providing indigenous gas to only power plants and fertilizer.
Leftover molecules should be ‘stored’ by reducing production at the field level. By 2027, the country’s captive power plants, three RLNG units, and fertilizer, and the rest of the industry should start utilizing RLNG/LPG/LPG Air-Mix phased. The case for fuel pricing based on futures with the role of the PMEX should be defined and implemented by a combined regulator.
In parallel, regulators with CPPA-G, DISCOs and Sui companies should determine timelines for the power and gas sectors’ loss reduction (losses 15 per cent, recovery 95 per cent and UFG 5.0 per cent). The case for reducing circular debt by investing in the above recommendations and increasing royalties on oil/gas, windfall levy against crude oil, levy on LPG/petroleum and GIDC should be implemented over the next five years.
The FIPPA applicability to investments in ambitious projects – TAPI, Reko Diq, refinery, petrochemical, CASA 1000, etc – by the ministry concerned without approval by the cabinet and the deregulation of the sector combined with the wealth fund will encourage PSO, OGDCL, PPL, utilities and DISCOs to partner with qualified and experienced partners.
‘Hopium’ should no longer be the norm; over the last 75 years, all we have seen is various stakeholders clinging on to false hope, side-stepping logic and reasoning and abandoning data-driven decision-making.
Pakistan’s current economic model is not working. Significant progress........