Ministries of petroleum and power being merged
By Khaleeq Kiani
ISLAMABAD: With the energy crisis worsening, the government has decided to merge the ministries of petroleum and water and power into a single ministry of energy to end their conflicting roles and bring them under a unified command to work out a plan to solve problems.
A senior government official told Dawn on Sunday that President Asif Ali Zardari had approved a plan presented to him by Petroleum Minister Dr Asim Hussain to merge the two ministries.
Dr Hussain is reported to have complained to the president that his efforts to steer the nation out of the energy crisis were facing problems from the water and power ministry.
The official said the president directed the authorities concerned to complete the legal and administrative work to merge the two ministries into one. The ministry of law, he said, would have to examine legalities of the issue and suggest changes in the rules of business for presentation to the federal cabinet for approval.
The merger of the two ministries was earlier recommended by the Asian Development Bank as part of a task force of the Friends of Democratic Pakistan (FODP).
The local energy sector companies had also told the federal government last year that the conflicting roles of petroleum and power ministries were adding to the problem and, therefore, the two ministries should be merged and their regulatory bodies brought under a single authority.
The entire process of merging the ministries would be completed by early 2012, the official said.
With the oil import bill estimated to increase by about 300 per cent to $38 billion by 2015, the FODP’s task force viewed a single regulator and an administrative ministry as the key to finding an integrated solution to the energy crisis.
The government had been warned that in the absence of such measures, the current energy gap of 18 million tons of oil equivalent (MTOE) would widen to an unsustainable 56 MTOE by 2015-16. The energy import requirement would simultaneously increase from $10 billion to $38 billion, almost double the country’s current export earnings. That will cause a considerable strain on economy, raise external current account deficit and worsen the balance of payments position.
Therefore, all kinds of cross-subsidies needed to be done away with by July 2013.
The current energy shortage of 5,000MW was anticipated about seven years ago, but the growth in demand was not fully anticipated by planners and capacity fell significantly, resulting in prolonged power cuts across the country.
Gas demand is increasing by 8.5 per cent and indigenous gas availability is projected to decline and the deficit is thus widening significantly. It has already been estimated to cross 2 billion cubic feet (BCFD) this winter against a demand of over 6BCFD and supplies of about 4 BCFD.
The FODP report regretted that while sufficient gas was not available for electricity generation, subsidised gas was being provided to fertiliser companies and gas connections were promised in new areas. It strongly recommended a reduction in the guaranteed rate of return to gas utilities and transmission and distribution losses.
Citing one estimate, the report said electricity and gas shortages caused an annual loss of over Rs220 billion to the industry and a job loss of over 400,000.
“Energy shortfalls are blocking growth, limiting employment opportunities and becoming a serious handicap to fight poverty that breeds extremism and violence in society at a time when the country is fighting a war against terrorism in its border areas,” it said.
There was a likelihood of creation of a separate ministry to deal with irrigation, agriculture and hydropower policies and projects, officials said.