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Editorial January 2019

Pakistan Facing Big Blow After International Court's Decision

Dear Readers.

Pakistan's government is facing yet another blow from the interational courts as it seems that our lawyers have finally lost the cases of Reko Diq and rental power.

Following losing the case after International Centre for Settlement of Investment Disputes (ICSID) has ordered Pakistan to pay penalties of $4 billion to TCC of Australia in Reko Diq case and other huge amounts including $780 million to Turkish firm M/s Karkey other rental projects ad IPPs. In case of non compliance of the verdict Pakistan's overseas assets likely to become at risk of being taken over as a security to enforce the verdict of an international arbitration court in the Karkey rental power case, and Reko Diq, which may lead to serious financial complications for Pakistan that may include slapping a ban on PIA operation in 60 coutries.

The experts have pointed out that the ICSID had started proceedings in March 2018 in the case filed by Turkish company Karkey, the court gave the ruling against Pakistan on August 22, 2018, asking it to pay $760 million in damages along with interest. Following the verdict, Karkey went to the US, UK and Germany to get the court decision enforced against Pakistan. Now, Pakistan's assets abroad are at major risk of being taken over as a security to implement the court's ruling. Earlier, Karkey had installed a 232-megawatt ship-mounted rental power plant during the tenure of Pakistan Peoples Party (PPP)-led government. It signed a rental services agreement in April 2009 under the Rental Power Policy 2008 for electricity production along with Lakhra Power Generation Company. Following the agreement, the Government of Pakistan also issued sovereign guarantees to meet payment obligations.

The Turkish company had not started commercial operations while in the meantime, the Supreme Court of Pakistan took suo motu notice of expensive rental power projects in 2012 and declared all the rental plant agreements illegal. The court also directed the National Accountability Bureau (NAB) to initiate probe into the matter which, during investigations, restricted the rental power plant carrying ship of Karkey from leaving Pakistan.

Karkey then filed arbitration claims against Pakistan in the ICSID under the Bilateral Investment Treaty (BIT). Karkey was among 12 rental power companies that were awarded electricity production contracts by the PPP government in 2009 to tackle acute power shortages.

According to NAB, the rental power ship was brought to Karachi Port in April 2011 to provide electricity to the national grid under the government's rental power policy in order to overcome the energy crisis. However, NAB said, Karkey failed to generate 231MW, as required under the agreement, although $9 million worth of capacity charges were paid to the company in advance. The plant produced only 30-55 MW and that too at a cost of Rs41 per unit, which was very expensive and a serious breach of contract. This led to a 50% increase in refund claims by the from $80 million to $120 million.

In a similar way, Pakistan has lost the Reko Diq case despite the fact that winning party was at fault like Karkey that could not fulfill its commitment. The million dollar question is that why Pakistan is losing case after case in the international courts against its rivals each and every time despite being aggrieved party and paying exorbitant fees to its lawyers, would PTI government take the pain to go deep into the matter and expose the conspiracy against Pakistan?

Naeem Qureshi.













Editorial September 2018

Environmental Degradation Causing Rs365 Billion Annual Loss

Dear Readers.

As per the estimated figures quoted by the experts, the environmental degradation is costing Pakistan's economy over Rs365 billion every year. This accounts from inadequate water supply, lack of access to sanitation and hygiene, agricultural soil degradation, indoor and urban air pollution, lead exposure, land degradation, increasing temperature (global warming) and deforestation. In fact, the environment strains faced by Pakistan over the past decades, is becoming a major threat for its citizens and the economy while all the rulers are criminally ignoring this mammoth threat to the nation.

The survey says that high migration to urban cities has made the metropolises very congested, resulting in inadequate civic infrastructure. Increased urbanisation, in turn, has led to air pollution and sanitation issues.

Air quality data recorded in cities confirm the presence of high concentration of suspended particulate matter in air, which is 2-3.5 times higher than the permissible limit. The survey reports that oxides of nitrogen (NOx) continue to increase in major cities mainly due to the rising number of CNG-operated vehicles. Formation of smog and haze is a common phenomenon in Pakistan's cities.

Most urban citizens rely either on private motor vehicles or two wheelers or the informal transport sector for urban transport. Diesel vehicles using crude diesel oil and motorcycles and rickshaws are of primary concern. Due to overloading, faulty injection nozzles and weak engines, these vehicles emit excessive carbon, while motorcycles and rickshaws, due to their two-stroke engines are the most inefficient in burning fuel and thus contribute most to emissions.

The survey says that vehicular emissions in all the major cities of Pakistan are the primary source of air pollution, adding that the transport sector is the largest user of petroleum products. Some other causes of air pollution listed in the survey include abrupt increase in the number of vehicles, inefficient automotive technology, use of unclean fuels, uncontrolled emissions of industrial units, emissions of brick kilns, the burning of garbage and the presence of dust.

The survey predicts that if existing trends continue, the country's population would grow from the present 220 million to 240 million by 2025. This would increase the number of vehicles from 11 million to 35 million, further deteriorating the air quality in cities. Moreover, with a growth in population, water pollution is also expected to increase proportionately, which could add 25 per cent more pollution to the water bodies.

Another fallout of urbanisation is solid waste generation. The survey says municipal sewage disposal is a serious environmental problem. Proper solid waste management has never been practiced in Pakistan. The country does not have a proper landfill or other disposal infrastructure. Neither do industries have treatment facilities. The collected waste is dumped on open spaces and low-lying areas. Whatever toxic is produced by disintegration of waste seeps into aquifers and pollutes underground water.

The problem of garbage disposal in Pakistan is mammoth. About 60,000 tonnes of municipal solid waste is daily generated in the country, while an estimated two million wet tonnes of human excreta is annually produced in the urban areas, of which 50 per cent goes into fresh water bodies. Only 8 per cent of the total wastewater is treated and the rest is discharged untreated into water bodies. Pakistan is extremely vulnerable to climate change impacts because of its geographical location, high population and low technological and resource base. Environmental degradation, along with poor hygiene, lack of basic sanitation and unsafe drinking water, is likely to have a huge impact on the health of the population, particularly children under five. The survey mentions that the Government of Pakistan is not taking any significant initiatives in collaboration with international agencies to counter complex issues regarding environmental degradation. Its pity that Pakistan has unveiled its water policy first time in the history but there is no one to implement it while country is facing acute shortage of water by every passing day.

Naeem Qureshi.











Editorial May June 2018

Energy Sector Gets Meager Allocation in Budget

Dear Readers.

Just two days after the budget announced by the Finance Minister Dr Miftah Ismail, a mini-budget has fallen within no time onto the masses as POL prices have been increased by the present regime without any hesitation. As the month of Holy Ramazan is approaching fast, the ruthless so-called democratic government has nothing to do with the public woes, is continuing to the anti-people decisions, even when it is just a few steps away from the exit door.

How a shameless regime would dare to face the public once again in the forthcoming elections? labelled as Election-Budget or a sugar-quoted budget, whatever it is, has a total outlay for Rs5.247 trillion. The inflationary budget, as it has proposed taxation measures outweigh the relief offered to industrialists, agriculturists and salaried persons ahead of elections. The Rs5.247 trillion budget is Rs493 billion or 10.3% higher than the outgoing fiscal year's original budget.

The key reason behind 10% increase was that Dr Ismail tried to present relatively realistic picture of expenditures, unlike his predecessor Ishaq Dar who always understated expenditures at time of budget.

There is a Rs1.9 trillion hole in the budget, which is equal to 4.9% of Gross Domestic Product (GDP) and will be filled by taking foreign and domestic loans. The government has taken measures, which would generate revenues that will be higher than the losses due to tax breaks. The government also backtracked from its earlier announcement of increasing income tax exemption threshold from Rs400,000 to Rs1.2 million. It levied very nominal tax of Rs1,000 to Rs2,000 per annum on people earning from Rs400,000 to Rs1.2 million.

The budget for fiscal year 2018-19 is quite unusual in all aspects. It is for the first time that a government that was elected for five years gave six budgets, which the Leader of the Opposition in the National Assembly Khursheed Shah called an attempt to 'usurp the right of the next parliament'. The budget has been announced without any wisdom Opposition political parties have called the move 'illegal and unconstitutional', but Ismail remained adamant that fiscal operations need to be announced for the entire year.

It was expected that the PML-N government would announce a people-friendly budget due to upcoming general elections. However, where the government gave tax relief to industrialists, agriculturalists, stock brokers and salaried persons, it also levied new taxes or increased the rates to recover the losses.

The government has proposed to increase the petroleum levy rates by three fold to Rs30 per litre on all petroleum products including kerosene oil and liquefied petroleum gas. The estimated revenue from this single measure is Rs300 billion for fiscal year 2018-19. The Federal Board of Revenue (FBR) chairman said the government would sustain Rs184.5 billion gross losses due to income tax, sales tax and customs duties reliefs. In order to compensate these losses, the government also levied minimum Rs93.3 billion new taxes. The cumulative impact of Petroleum Levy and new additional taxes is far higher than Rs184.5 billion relief measures.

Ismail proposed Rs800 billion for the Public Sector Development Programme (PSDP), which is Rs230 billion less than the Planning Ministry printed in its document of the PSDP for 2018-19. The government has proposed the FBR's tax collection target at Rs4.435 trillion, non-tax collection target at Rs772 billion. The four provinces will get Rs2.59 trillion as their share in the federal tax collection under the 7th National Finance Commission Award. The budget may also prove a nail in the coffin of the present regime as it has increased the unpopularity of the PML-N government.

Naeem Qureshi.

















Editorial April 2018

Energy Sector Gets Meager Allocation In Budget

Dear Readers.

The Ministry of Finance has recommended a Rs800 billion development budget for upcoming financial year 2018-19, decreasing it by 20 percent as compared to the current fiscal. This cut could impede the physical progress of around 1,100 schemes including energy sector as well.

The Ministry of Planning, Development and Reform (MPDR) has officially informed by the finance ministry regarding its proposal to set the development budget at Rs800 billion for FY 2018-19. Adviser to Prime Minister on Finance, Revenue and Economic affairs, Dr. Miftah Ismail has stated the next FY 2018-19 budget wouldn't have an increased Public-Sector Development Programme (PSDP) budget. Mr. Ismail has said the next years development budget would be allotted for ongoing current schemes.

But the Planning Ministry opposes this policy of allotting the budget for current schemes underway. It believes the outgoing government must provide fiscal space in macroeconomic framework for the next government to work with and launch new schemes, as per a senior government official in the planning commission.

Planning Secretary, Shoaib Siddiqui said the Rs800 billion proposed development budget set for next financial year wasn't sufficient and the planning ministry would take up the issue with the Prime Minister Shahid Khaqan Abbasi corroborating the figure above.

He added the proposed Rs800 billion development budget also includes Rs140 billion quota for non-core development projects and means would contribute to decrease of quota for important development projects.

According to sources in the planning ministry, the proposed gross development budget of Rs800 billion would reduce the speed of present projects underway which include water sector, national highways and power projects.

To determine development needs of six dozen departments, an inter-ministerial body Priorities Committee is set to start work on this in the days to come. Cut in development budget is a consequence of bad governance of the present government that remained busy in non-issues, putting the national economy in hot-waters and rampant corruption that is reflexing in energy sector as well by hitting snags in ongoing power projects.

Naeem Qureshi.







Editorial February March 2018

Gas Load-Shedding Becoming Big Headache

Dear Readers.

Low pressure and gas load-shedding has been part of the winter season in Pakistan for years now. The complaints have been similar this year, if not the same. Recently, gas shortage aggravated in many areas of Sindh particularly in Karachi. While this has become the new normal for the country, it wasn't taken well after the government repeatedly boasted about both power and gas surplus this year.

The reason however, behind the recent decline in gas supply had been a fault in the LNG terminal, which cut a supply of 600 mmcfd to the national grid due to which a big chunk of indigenous gas meant for Sindh and Blochistan is being diverted to upcountry.

The new RLNG terminal at Port Qasim had reportedly incurred a major technical fault of leakage in an insulation joint that connected the system to the pipeline infrastructure, which eventually forced Sui Northern Gas Pipelines Limited (SNGPL) to divert the gas from the industry to the domestic household sector.

However, the gas supplies in the country shot up as the second RLNG terminal at Port Qasim finally became operational after a long period of delay. Increasing the supply of RLNG by 600 mmcfd, the country now has started receiving about 1.2 bcfd of imported LNG. The government has claimed it to be a big achievement at a crucial time as many areas of Punjab and parts of Rawalpindi and Islamabad are still experiencing low pressures and gas shortages.

The coming months will tell how tall government's claims stand. However, one thing is worth mentioning when it comes to increasing the resource base: the authorities have thus far focused on imported gas to bridge the shortfalls - whether that of gas or electricity. The present government's interest in the E&P sector has been meagre. This is why there has been no auction of new blocks to the E&P companies by the current government until now; However, nearing the completion of its tenure, the federal government is now looking to go into bidding for new blocks to the oil and gas firms to hunt for new reserves.

The government's enthusiasm for RLNG can also be seen from its upcoming plans. It claims that around 2450 MW RNLG based power plants would be completed by February 2018, which includes Haveli Bahadur Shah Combined Cycle Power Plant and Balloki Combined Cycle Power Plant. It is also considering to authorise private sector to directly supply RLNG to the consumers and is ready to assist the Sindh government to establish its first RLNG based power plant of 1200 MW. Furthermore, a 660 MW RLNG based plant in KP might also get a nod soon. But how the domestic sector and CNG vehicles would survive sans gas supply or low-pressured gas that is continuing for the past many months inabated. What happened to many new sources of gas recovery in Sindh and elsewhere?

Naeem Qureshi.








Editorial December 2017

Circular Debt, Haunting Again

Dear Readers.

The news of circular debt rising again to the higher levels creates confusion about the performance of the sector and uncertainty about sustainability of the improvement achieved so far.

Circular debt was officially defined by the Economic Coordination Committee (ECC) of the Cabinet in 2014, in the following words: "The circular debt is the amount of cash shortfall within the Central Power Purchasing Agency (CPPA), which it cannot pay to power supply companies. The overdue amount is a result of: (a) the difference between the actual cost and the tariff determined by National Electric Power Regulatory Authority (Nepra) which is the distribution company's loss over and collections under that allowed by Nepra, (b) the delayed or non-payment of subsidies by government, and (c) delayed determination and notification of tariffs. It is the government's policy to reduce, limit to a certain amount which would be reduced over time, and eliminate the causes of the circular Debt." (National Power Tariff and Subsidy Policy guidelines 2014).

In simple words, the issue of circular debt is related to cash flows in the power sector, which are affected by the performance of the distribution companies (Discos) in terms of their collections and line losses as well as the decisions relating to tariff determination by the regulator (Nepra) and subsidy budgeting.

The cash flows, needed to run the power generation units, are to be collected from the consumers who can only be charged up to the extent of tariff determined by Nepra. The regulatory body determines 11 different tariffs for consumers of 11 Discos, depending on the conditions in each one of them.

The government changes the determined tariff in two ways: It asks all the Discos to charge the lowest of these 11 tariffs, as uniform national tariff, the difference to be paid by the government as subsidy. For instance, if the average tariff for all state-owned Discos is Rs12 a unit and the minimum determined tariff for a Disco is Rs10 a unit, the federal government would pick up the difference of Rs2 a unit as tariff differential subsidy (TDS).

Secondly, in pursuance of its socio-economic objectives, the federal government (and in case of agricultural consumers, some provincial governments as well) further reduce this uniform tariff for certain categories of consumers (agricultural, industrial, Fata, Balochistan, AJK) and undertake to pay the difference as subsidies to the distribution companies (Discos).

The former Secretary, Ministry of Water, Younus Dagha had suggested various measures to overcome the burgeoning circular debt to the government that all the three elements of power sector cash flows have to make their contributions for the smooth sailing of the sector. The performance by the power companies must sustain the improvements achieved in 2015 and 2016 and further consolidate it; tariff setting by the regulator must be based on ground realities, not on idealistic assumptions; and subsidy budgeting should be according to the quantum of benefits passed on to various consumers by Discos under government policies. Unless this happens, the circular debt cannot be wished away. The federal government instead of taking these measures have transferred the then secretary and the circular debt has once again piled up to a record level. Government continues to borrow the money to pay the debt and the consumers will have to pay the brunt of interest on this loan.

Naeem Qureshi.











Editorial August September 2017

NEPRA Dissatisfied Over Power Companies' Performance'

Dear Readers.

The newly elected prime minister has merged two important ministries into a single Ministry of Energy, something that the PML-N had promised it would do in its election manifesto of 2013.

The water and power ministry has been bifurcated, and its power wing is now to be merged with the petroleum ministry. The idea is an old one, and builds on an earlier generation of reforms under which the mammoth WAPDA was bifurcated into separate water and power wings almost a decade ago. Since at least 2010, if not earlier, while the PPP government struggled with the power crisis, the proposal would be raised anew, always to be shelved. Even the PML-N promised to implement the idea, but strangely waited till the last year of its rule to actually implement it.

Technically, the idea is sound and all those who have advocated it or examined it have concluded that it can help streamline the functioning of the power sector by bringing fuel supply and other operational issues under unified supervision. But the timing and the speed at which the proposal has now been implemented suggest that priorities other than the smooth functioning of the power sector may be at play.

A clue is provided in the prime minister's own words, where he said that the completion of ongoing projects was a crucial priority for him. With both ministries whose approvals are key to the speedy implementation of ongoing projects in the power sector now working directly under the new prime minister, as well as the latter's retention of the Planning Commission portfolio - meaning his personal oversight of all matters related to CPEC - it appears that the commencement of commercial operations in all power projects will now be the government's top priority. The linchpin here is finance.

Without the required cash flows, the power sector can chug along for a brief period before sputtering to a halt. Streamlining the operations is fine, but the dividends that this can yield are ultimately constrained by the availability of financial resources.

Besides, aiming for the completion of the projects as a political strategy carries substantial technical risks as well as the potential for locking the sector into a high-cost growth path. The repeated technical outages being experienced at the new power plants recently inaugurated or started for test runs in southern Punjab make this clear.

The case of the Nandipur power plant stands as a supreme testimony to the waste and inefficiency that haste of this sort can lead to in power-sector projects.

However, the present government is known for its bad governance and termed as responsible for down-sliding the economy. Losing at least Rs700 billion textile exports and wrapping up textile ministry at this juncture when it was most needed, the fate of the newly established ministry could be imagine if the present regime continues to its attitude.

Naeem Qureshi.















Editorial July 2017

NEPRA Dissatisfied Over Power Companies' Performance'

Dear Readers.

At this juncture when country is facing power shortage and menace of load-shedding is still haunting, the National Electric Power Regulatory Authority (Nepra) has expressed its displeasure over the performance of the power distribution companies and IPPs.

"None of the distribution companies (DISCOs) is up to the mark in terms of performance criteria; no company has improved its overall performance (except minor improvements) over the last five years, in fact, there are cases of worsening performance; in relative terms, Lesco appears to be the top performer among two close followers – Gepco and Mepco; average performers are Lesco and Fesco; below average performers are K-Electric, Pesco and Hesco; the worst ones are Qesco and Sepco; and in provincial terms, Punjab-located companies are better performers of the lot", the report said.

The Fiscal Policy Statement 2016-17 also says that Parliament was kept in dark about power sector losses. Nepra report is based on transmission and distribution (T&D) losses, recovery of dues, time frame for new connections and safety. It has given equal weightage to all these four issues. The most important issue is T&D losses. The worst performers in terms of T&D losses are Peshawar Electric Supply Company (Pesco) and Sukkur Electric Power Company (Sepco). Sepco has reported a loss of 38.29% against allowed losses of 27.5%. Similar is the case of Pesco with reported loss of 34.8% against the allowed 26%.

Nepra allows tariff-adjustable losses based on the difficulties and objective conditions prevailing in various companies. There is a negligible improvement in terms of these parameters in both of these companies. The improvement shown may be the margin of error in measurement itself. The irony is that the governments in Sindh and Khyber-Pakhtunkhwa (K-P) raise hue and cry against the power ministry and DISCOs if and when punitive action is taken against powerful defaulters and thieves. The only recourse available to take action against unidentifiable defaulters is to disconnect all the customers drawing electricity from a distribution transformer.

It's so disappointing that the performance of K-Electric comes in the poorest compaies. Despite charging highest tariff, no relief to the consumers in case of low oil prices, enhancing its recovery to almost 90 per cent, K Electric continues to haunt the consumers with its poor services though it showed the technique which rewards and punishes areas in terms of load-shedding and quality of service – DHA gets better service than Lyari or Liaquatabad. Reportedly, there used to be a time when large-scale theft was in these areas. K-Electric and Hyderabad Electric Supply Company (Hesco), although among worst performers, have reduced their T&D losses considerably – K-Electric from 32.2% to 23.69% and Hesco from 33.8% to 27.1%. K-Electric’s performance has stagnated over the years as its recovery rate has remained static at around 90%? Despite increasing tariff on each and every time, K Electric has also completed its campaign to replace fast meters with old ones.

Now, Karaciites are in a fix that whether the K Electric would be sold to a new exploiter or wil remain in the old hands to remain exploited and harassed as usual. Abraaj Group while playing hide-and-seek game with its consumers for the last few years is now playing with the nerves of the stakeholders for not disclosing the real facts behind its deal with Chinese firm - Shanghai Electric Power Company (SEPC) as it had made a deal for an amount of $1.8 billion to sell its controlling shares to the SEPC which was reduced to $1.7 billion later on but now the rumours are that SEPC has refused to finalise the deal due to one the reasons that K Electric has yet to refund a clear-cut amount of Rs62 billion that has been over-charged from the consumers. Apparently it seems that the two companies may finalise their deal, but the poor consumers have been left in the lurch as where are the regulators who must come to the fore and should ensure that K Electric clears all its dues to the IPPs, WAPDA, PSO, SSGC and the consumers.

Naeem Qureshi.















Editorial May 2017

Are We Repeating Another 'HEATWAVE DISASTER'ER'

Dear Readers.

Karachi is vulnerable to every type of natural disaster. We are not even able to sustain a minor type of heatwave that had claimed several hundred lives of poor Karachiites the previous years. Are we heading towards another such catastrophe? The answer is yes. Not just because of rising of mercury to the level of 44 to 46 celcius but our pathetic attitude, our criminal negligence, challenge to the nature. All the civic agencies that are responsible for making this mega city green, are turning this 'once green city' a desert for their greed and lust for the money. These agencies led by KMC, KDA, Town Municipal Committees, Navy, KPT, Railways, K Electric, Cantonment Boards, DHA, Bahria Town are equally resposnsible for making Karachi a desert like place by felling hundred of thousands of trees for the last many years. In the last three years, over three hundred thousand trees have been uprooted by these cruel agencies/organizations. These agencies particularly Pakistan Navy, Cantonment Boards and K Electric are treating this city step-motherly by cutting thousands of full-grown trees every year for the lust of money.

Similar heatwave, the Karachiites are facing was the problem being faced by the tropical cities like Singapore, Hong Kong, Bangkok, Jakarta, Mumbai, Kolkata, Colombo, etc. but their governments with the help of local government have planted millions of trees all over the city and its surroundings thus successfully able to change the demography of these cities. Ironically, no one is here to cut the bloody hands of K Electric, Cantonment Boards, KMC, KDA and Town Committees that are ruthlessly chopping/uprooting the trees that are providing us breathing space, saving us from harsh weather, heatwave, being a source of rains.

The deaf and dumb people sitting in the assemblies are too oblivious of the fact they too can be a victim of this heatwave catastrophe. They should at least make a law that prevents uprooting trees, and suggest a minimum punishment of life imprisonment in order to avoid this menace of tree cutting for lust of money.

Where are the so-called civil society, the NGOs being run with the funds of millions of dollars are in deep slumber and have least interest in this very sensitive issue.

The premier magazine of energy sector "Energy Update" has completed 11 years of its publication and now by the grace of Allah the Almighty is now entering into 12th year for which we are grateful to our readers, sponsors, advertisers and well-wishers as without their patronage it was not possible to continue this difficult journey, We pay gratitude to all of you and hope to get your kind support in future as well.

We always try to make this magazine even better, bolder, courageous, containing more credible stuff and truthful information by complying all the journalistic norms. We hope that the readers would like the new look of the magazine.

Naeem Qureshi.















Editorial January 2017

Gas Tariff Increase, Govt Gives Shockwave to The Consumers

Dear Readers.

The year 2017 has dawned with a renewed hopes for easing out energy crisis in the country, especially with optimism that there would be less duration for load-shedding both in rural and urban areas during the coming summer. Many under-construction power generation projects are expected to start their production during the year and construction on more would start during the year. Pakistan has been facing acute shortage of energy including electricity and natural gas, resulting in power load-shedding and gas load management in many areas of the country for several years now. This has not only affected the routine life of the people, but badly impacted the industrial growth and exports. Various energy related projects have been initiated especially during the last two years in private sector with foreign investment.

Many power projects in hydro, natural gas, coal, nuclear and alternative energy are currently under construction and out of them some have already started production and it is expected that by 2018 Pakistan will be completely free from power load shedding, even electricity production would be in surplus. Besides power producing units, the government is also focusing on improving transmission and grid system, which would result in less power losses and uninterrupted power supply.

Under the strategic China-Pakistan Economic Corridor (CPEC) besides a number of infrastructure development projects, many private Chinese companies have started investing in power projects. In addition to the traditional thermal power generation projects, Chinese investment is also coming in coal, nuclear and renewable energy projects. Chashma power plants-II and -III have already started adding power in the national grid, and Chashma-IV will be ready by April 2017 thus increasing the contribution of nuclear power in the energy mix. China is also making huge investment in two other nuclear power plants in Karachi (K-2 and K-3), which are expected to generate 2200 mega watt electricity when be ready in the future. A large Chinese investment is coming in renewable energy projects including wind and solar power projects.

Pakistan is impressively progressing in coal development and generating power through indigenous coal, vastly deposited in Thar desert. Sindh Engro Coal Mining Company (SECMC) and Engro Powergen Thar Ltd (EPTL) with Chinese investment are undertaking a mining and 330X2 (660 MW) power generation project in Tharparkar district.

Pakistan has a huge power generation potential in renewable energy as God has blessed us almost full-year sunshine in many parts and a vast area of wind corridors in Sindh and Balochistan coast. According to a survey conducted by Pakistan Meteorological Department only Sindh has a potential to generate over 11,000 MW from wind turbines. Pakistan is included in the list of the highest solar insolation in the world. Only Quaid-e-Azam Solar Power Park in Punjab is expected to produce 1000 MW power during 2017. Unfortunately, still solar and wind have very low contribution in overall energy production in Pakistan, which needs to be increased by encouraging local as well as foreign investments in clean energy projects. It is a matter of the fact that alternative energy producing units are very costly, only foreign investment can solve it. Luckily, Chinese investment is available for Pakistan under CPEC.

With an optimistic energy outlook for the year 2017, we hope that the country's march towards progress would be accelerated in order to achieve a 5.7 percent growth in Gross Domestic Product (GDP) by 2018. Reduction in load-shedding would help increase industrial and trading activities thus would put a positive impact on country's exports. Hydro and nuclear energies are considered cost-effective. For consumers, the main concern is higher electricity bill, which would also be eased when overall cost of production of the energy mix would come down.

Naeem Qureshi.















Editorial November 2016

Gas Tariff Increase, Govt Gives Shockwave to The Consumers

Dear Readers.

The present regime has once again dropped the bomb on the poor masses of a substantial increase in gas prices. The 36 per cent in gas tariff is such a big burden on the consumers already fed up with this government that is making people's lives a hell with its indiscriminate increases in utilities and commodities. It was an abrupt move that has come with shockwave to the common man. The Oil and Gas Regulatory Authority (OGRA) has decided to increase gas price by 36% for the ongoing financial year (2016-17).

A former Prime Minister, Shaukat Aziz who was an alien to the nation when he was induced in the government, had linked the gas tariff with the prices of crude oil in the international market and let it fluctuating rather spiralling. The former PM had done this on the behest on IMF and World Bank when he signed an agreement for a stand-by loan of just $597 million. The original agreement was meant for bringing all the fuel and energy prices at par.It seems that the present Finance Minister, Ishaq Dar is implementing the same agreement religiously. It's not that surprising for us that OGRA has sought massive hike in gas rates even though global oil prices have slumped by more than 50% in recent past because it was just the outcome of obeying his masters and any incraese in oil and gas or energy is not linked with the price fluctutaion in the international market.

The gas distribution companies i.e. SSGC and SNGC on the other hand had demanded the highest possible increase to tone down their massive losses and the theft besides corruption of billions of rupees in the recent past. The government has been enforcing a policy of maintaining higher gas prices thus far. Therefore, the government would implement the price for the SNGPL across the country and SSGC consumers would also be facing an increase in gas prices despite OGRA's tariff reduction. The differential in prices between prescribed and notified by consumers would go to the provinces in the form of gas development surcharge (GDS).

The regulator approved Rs201 billion operating income and Rs161 billion operating expenditure for the SNGPL. It also approved Rs39.5 billion operating profit for the SNGPL. OGRA approved Rs175 billion operating income and Rs140 billion operating expenditure for the SSGC in addition to an operating profit for SSGC of Rs35.4 billion.

Though regulator has rejected an SNGPL request to increase the benchmark of unaccounted-for-gas (UFG), allowing the company to recover 4.5% of total losses from consumers, it was another effort to squeeze the consumers to compensate the compay's ineficiency by robbing the consumers. Due to high losses, the company will have to face a seven billion-rupee hit on its profitability. The SSGC had requested to set the UFG benchmark at 7% - but the regulator set it at 4.5%. The regulator has sent its decision to the federal government seeking advice for a price notification for different categories of consumers. Currently, the government is cross-subsidising gas prices for different consumers, including domestic by putting burden on other consumers.

Naeem Qureshi.







Editorial September 2016

CNG Load-Shedding Despite Off Season?

Dear Readers.

Despite improved production of natural gas from existing sources, import of LNG, increased utilisation of LPG, the two gas distribution companies have resorted to shed supply of CNG in the country, causing unnecessary hardships for the commuters, three to four days a week closure of CNG supply by Sui Southern and Sui Northern Gas Companies to the consumers is quite unbearable. This is being done at this time when natural gas consumption remains at the lowest ebb due to hot and humid weather across the country. SSGC's high ups are reluctant to explain proper reason for the frequent shut-down of CNG stations during long summer season.

The situation of SNG supply had been improved when the government commenced LNG import last winter. May be the government's decision to import another 750,000 tonnes of LNG is to improve the gas supply across the country.

Government has issued two international tenders for 750,000 tonnes of liquefied natural gas (LNG) each in the coming month in order to minimise the shortage of natural gas. This act of govt. would definitely improve the supply of CNG to the motorists. This is another effort to ease the crippling energy shortages, with Prime Minister Nawaz Sharif under pressure to end blackouts before the 2018 general election.

The PM for this purpose has established Pakistan LNG, a new state-owned company set up to manage procurement and supply of gas. The firms from Australia, Malaysia, Russia, Qatar, the United States and Azerbaijan are interested in the two tenders The specifics of the tenders are being finalised, but they will probably be a 5-year and a 15-year offer, as well as a possible spot purchase. According to officials, Pakistan has ploughed billions of dollars into LNG infrastructure, including construction of a second LNG import terminal and pipelines linking Karachi with Lahore in the Punjab region, the nation's industrial heartland.

Pakistan has been earmarked as an up-and-coming demand outlet for the oversupplied LNG market. Qatar, which signed two term supply contracts with Pakistan this year, is the Pakistan's largest LNG supplier. Pakistan is heavily reliant on expensive furnace oil imports to plug energy shortfalls and officials expect the LNG imports to lower the cost of energy in a nation of 190 million people.

Pakistan would also negotiate separate government-to-government LNG deals. An impending glut in global LNG production means Pakistan expects bids by international companies to be far below those offered by trading house Gunvor, which won the last international tender. Gunvor offered a delivered price of 13.37 percent of a barrel of crude oil for the 60-cargo supply tender between 2016 and 2020. It is expected a substantial price decline because of the global supply glut and new production coming on line in the short term.

Consumers in Pakistan too are expecting a downward revision of CNG and LPG prices locally but the unfortunate Pakistani consumers are battling with the shortage crisis at the moment, no one knows when they would be given price cushion of falling prices of all the forms of fuels they consume.

Naeem Qureshi.







Editorial June 2016

Federal Budget Offers Nothing To The Masses

Dear Readers.

The Federal Budget 2016-17 offers nothing to the masses as it's another replica of IMF's dictated document meant for revenue collection to pay the mighty debts. The budget is not at all “public friendly”, but has been termed by the experts a jugglery of words, neither friendly with industry nor good for SME (Small and medium Enterprises) sector, not promoting business efforts for SME sector, it has only made death affordable for the poor, opined by the renowned tax expert, Waliullah Khan as he termed the budget speech delivered by Federal Finance Minister Ishaq Dar as disappointing. "This budget has failed to address the major priorities regarding national security, rehabilitation of Temporary Displaced Persons (TDPs,) poverty reduction, further economic stabilization, energy and infrastructure development that should continue to be the priorities of the government", he commented.

Labourers, traders and individuals belonging to other sectors shall suffer from the budget and the announcements made will not please the farmers as there is need for practical measures. It was also a surprise that the present government that was much trumpeting its efforts to address the issue of energy crisis on top priority basis, has made insignificant allocation for this sector.

One has failed to understand that why the present government has penalized the indigenous industry by increasing import duties on its inputs despite the fact that the whole world is pampering its industry by extending many incentives in the shape of minimizing import duties on industrial raw materials in order to strengthen the economy. But on the contrary, the government is all for ruining the local industry by slapping it with duties and taxes while on the other hand budget makers have given unjustified benefit of duty reduction on import of finished goods. The ceramic industry is the major example of step-motherly treatment by the present government and FBR. Ceramic industry was already dying because of massive smuggling through the borders and dumping of cheap and sub-standard Chinese tiles in the local market.

Several units of ceramic industry in Karachi and Gujranwala have already been shut down and over 70 per cent production has been affected. What was the reason behind this punishment to the industry is better known to Ishaq Dar and FBR but this move is termed as anti-economy and against the national interest. Almost every industry whether it is export-oriented or local industry is moaning due to budgetary measures that are meant for uprooting our industrial base. The budgetary measures against industry and export sector are sans any wisdom but will not yield any additional revenue to the government.

Naeem Qureshi.







Editorial May 2016

Govt Fails to Complete Major Power Projects in Time

Dear Readers.

Very few things would take priority for the government over its commitment to end power outages in the country by the end of its term in 2018. But when there are reports making the rounds that there could be a possible delay in completing power projects that would help achieve that goal, it is bound to annoy the prime minister. With more than half the PML-N government’s term over, the completion of two crucial projects is likely to be delayed. The authorities are fighting a race against time to complete the Neelum-Jhelum hydropower project and the Tarbela-IV Extension before the general elections. If that does not happen, the prime minister’s hopes of staying true to his word regarding adding thousands of megawatts of electricity to the national grid will be dashed.

The Wapda chairman has repeatedly assured that work on the Tarbela-IV Extension would be completed by June 2017, but a delay is in the offing. Meanwhile, despite cost revisions that have seen the estimate shoot up by over 100 per cent, the Neelum-Jhelum project is also unlikely to be completed on time. The issue with the delays is not just about the projects not being ready to supply much-needed electricity. There are also serious concerns about cost revisions, which will take a great toll on the government’s finances.

For long, bureaucratic red tape and an inefficient organisational structure have hindered the country’s development on various fronts. While the government at times is all too ready to boast about the few power projects that have allowed some relief to the energy sector, there still remain important projects, which if not implemented, are likely to derail the progress Pakistan is hoping to make. With energy needs bound to go up, the country can ill-afford to be found wanting in terms of making progress in the power sector.

At the same time, despite some reforms being initiated, deep-rooted issues in the sector remain intact. It is of utmost importance that the government ensures the completion of the two said projects in time as Pakistan’s long-term economic progress depends increasingly on resolving our energy needs.

The situation is very crucial for the present regime, already sinking in many scandals especially Panama Leaks, as it completely failed in meeting any commitment with the poor nation as it just followed the footsteps of most failure regime of PPP from which the PML-N took over the reins of the government.

Naeem Qureshi.







Editorial March 2016

Another Controversial Power Project by PML-N Govt

Dear Readers.

Present government's another major power project is in doldrums due to the strong resistance by Sindh government on legal and constitutional grounds. The case of 1,180MW LNG based power plant proposed to be installed in Bhikki, Distt Shaikhupura is pending before the National Electric Power Regulatory Authority (Nepra).

The regulator was hearing comments of the stakeholders on a request filed by Quaid-e-Azam Thermal Power (Pvt) Limited for grant of generation licence for the project located in Bhikki, Shaikhupura. Sindh government is opposing the project of LNG-based power plants in Punjab on the plea that these should not be allowed without a formal approval of the Council of Common Interests (CCI), which was the constitutional forum to settle inter-provincial issues.

The Sindh government believed the natural gas, electricity and all related incidental or ancillary matters appeared at the entry number 2, 4 and 18 of the second part of the fourth schedule of the Constitution and fell in the provincial domain, and hence should be taken up for approval with the CCI. Sindh's Representative Tariq Shah said LNG power plants in Punjab should not be set up solely on the basis of decisions of the cabinet's Economic Coordination Committee (ECC) and its energy committee because they had no legal standing on the issue in the eyes of the Constitution. "This project should be presented before CCI for approval and should not be initiated unless cleared."

He said the regulator would have to consider Sindh government's viewpoint and Punjab should not be granted generation licence to operate the plant. Sindh has already submitted before Nepra in writing that the regasified LNG (RLNG) after import would be swapped with natural gas from Zamzama, Dadu, Kandanwari and Sawan fields and Sindh's consent was necessary for such a swap. Quaid-e-Azam Thermal Power's CEO Ahad Khan Cheema informed Nepra that a gas sales-purchase agreement (SPA) with the Sui Northern Gas Pipeline Limited (SNGPL) would be signed on Wednesday (today). He said the project had been approved at the highest level and contract for its installation had also been awarded through competitive bidding.

He said the SNGPL and Sui Southern Gas Company (SSGC) were also expected to sign SPA for swapping RLNG with domestic gas near Sawan field, while better quality imported LNG would be made available for consumption in Sindh. He said the two gas companies were also working on projects for increasing their pipeline capacity by 800mmcfd (million cubic feet per day) from 400mmcfd to support LNG-based power stations in Punjab, where various consumers were facing extreme energy shortages. Responding to a question from Nepra's chairman, Mr Cheema said his company was not the first to contract new power plants of General Electric (GE). He said the GE had contracted 10 similar orders, latest being in France where these plants were running successfully.

Rejected viewpoint of the Sindh government, he said LNG-based power plants did not require approval of the CCI and these plants were being set up under the power policy of the government of Pakistan and all relevant approvals were in place. He said a number of issues raised by Nepra case officers were out of the regulator's jurisdiction. Sadozai commented that anyone could come to the regulator for generation licence which had to take into account views and concerns of all the stakeholders and also frame its own issues before granting a licence. He said it was important for the regulator to satisfy all questions and issues raised by any side.

The Nepra staff wondered if the project was justified given the fact that a number of imported and local coal-based projects were being set up in the south of the country while their generation was supposed to be consumed in the centre and north of the country. It also pointed out that currently there was no dedicated transmission line in the country to deliver RLNG into the project site, and LNG import agreements and arrangements were still not in place.

Naeem Qureshi.







Editorial February 2016

Govt. Enjoying Forced Profits of Falling Pol Prices

Dear Readers.

The entire nation is very keenly eyeing on the government to make a significant reduction in petroleum prices as the global prices of POL hit the record low in the last thirteen years and a big drop is local prices is a must as the present regime has made an insignificant but forced profit of $11 billion since it came into the power. The current scenario is demanding from the Rulers to at least reduce petrol price to the tune of Rs40 per litre considering another price drop after which it staggering at $27 per barrel. Situation may even go worse after the Irani government's decision to pump its oil into the international market and US government's decision to depend on more of its indigenous sources besides drop in oil demand in China.

It is not only surprising but extremely worrisome that in Pakistan, the oil prices have not shown any big drop as yet because the government has often raised taxes to meet its budgetary target. On November 1, 2015, while partially adjusting the impact of rising global oil prices in taxes for November, the government had announced a hike in the prices of petrol and High Speed Diesel (HSD) but kept the rates of kerosene oil, High Octane Blending Component (HOBC) and Light Diesel Oil (LDO) unchanged. The petrol price was increased by Rs2.50 per litre from Rs73.76 to rest at Rs76.26 per litre.

Ironically, the Oil and Gas Regulatory Authority (OGRA) had also recommended an increase of Rs5.73 per litre in the price of HOBC, a fuel used in luxury cars, but the government did not grant the hike. On August 31, 2015, the government had announced reduction in prices of petroleum products by Rs3 a litre on all denominations.

The price of Light Diesel Oil had also been lowered by Rs3 per liter from Rs56.59 per liter to Rs 53.59 per litre. On June 1, 2015, the prices of all petroleum products in Pakistan were increased by about Rs3.50 per litre for the month of June. The price of petrol was thus increased by Rs3.50 to Rs77.79 from Rs74.29 per litre. The levy on petrol was reduced from Rs10 to Rs8.30 per litre, but the GST was increased by two per cent.

The price of high speed diesel (HSD) was raised by Rs3.51 to Rs87.12 from Rs83.41 per litre. Petroleum levy on HSD was slightly brought down to Rs7.76 from Rs8 per litre and the GST by four per cent. The price of kerosene was increased by Rs3.50 to Rs64.94 from Rs61.44 per litre. The GST on kerosene was kept unchanged and petroleum levy reduced from Rs6 to Rs3.41 per litre. The government has falsely claimed that it had borne the brunt of Rs6 billion revenue losses by passing on to consumers only half of the increase recommended by OGRA. On March 31, 2015, the government had increased the petrol price by Rs4 and diesel by Rs3, while kerosene oil's price had remained unchanged. The new price for petrol was Rs74.29, while the price of diesel had stood at Rs86.86.

On February 1, 2015, the Federal In January 2015, the petrol and diesel prices in Pakistan had stood at Rs78.3 and Rs86.23 per litre respectively. It is imperative to recall that on September 24, 2012, the price of petrol in Pakistan had rested at Rs108.45 per litre considering the highest price of the decade internationally. The government has no more right to deprive the nation of passing on the benefit of price differential.

Naeem Qureshi.







Editorial December 2015

Shale Gas Exploration Should Be Done Seriously

Dear Readers.

The affairs of Ministry of Petroleum and Natural Resources have remained extremely controversial particularly in the deals of LNG from Qatar, nothing could be considered as transparent in the energy sector at this juncture when the country is still in the grip of electricity and gas crisis. But there was a good news that Pakistan has reserves of shale gas. It seems that in the era of depleting natural gas reserves, the future will be depending on shale gas. So there is a need to establish an independent ministry or at least a department to exploit considerable shale oil/gas in the country. The exploration of shale gas is twice as expensive, time consuming and technology intensive as conventional hydrocarbon resources.

Pakistan is in the throes of a serious energy crisis which in future will escalate if appropriate and timely steps are not taken by the quarters concerned. We need to invest in exploring shale gas as our shale gas recoverable resources are around 200 Trillion Cubic Feet (TCF) and shale oil 2,323 billion stock tank barrels (BSTB), as per estimated by the experts. The government should also formulate shale oil/gas policy as early as possible so that local and international companies could be invited to invest in the sector. Exploration of shale resources will not only require massive finances but highly technical staff and unfortunately the government at present lacks on both the fronts, so to make the shale oil/gas exploration a success an independent department with technical staff is a must.

Two public sector companies-Oil and Gas Development Company Limited (OGDCL) and Pakistan Petroleum Company Limited (PPL) are currently working on a pilot project to drill the first shale gas well in Sindh, which is likely to be completed in March 2016 , the official added. The project was launched following a study conducted with financial support from the United States Agency for International Development (USAID), subsequent to confirming availability of 10,159 trillion cubic feet (TCF) Shale gas and 2,323 billions of stock tank barrels (BSTB) Shale oil in place. Technically recoverable resources were 58 BSTB and risked technically recoverable resources estimated at 14 BSTB. Date collected from 124 oil/gas wells across the country was used to finalise the latest study, including laboratory analysis on shale cores and cuttings in the United States.

US Energy Information Administration (USEIA) in April 2011 reported the presence of 206 TCF Shale Gas in Place Resource in Lower Indus Basin out of which 51 TCF were technically recoverable. However, in June 2013, USEIA revised Shale Gas resources in Pakistan at 586 TCF in place out of which 105 TCF were tipped as risked technically recoverable and also included 9.1 Billion Barrel Shale Oil risked technically recoverable resources out of 227 Billion Barrel Shale Oil in place.

According to Petroleum Ministry officials, out of 10,159 TCF an estimated 200 TCF of shale gas resources are recoverable against 105 TCF estimated in the previous study. Zahid Muzafar, Chairman Board of Directors OGDCL, stated that the completion of first shale oil/gas well of the country would be completed within four to five months and after the completion of first well the government will be in a position to determine wellhead price for shale gas/oil.

It would be around $10 per Million British Thermal Unit (MMBTU) and on the basis of the pilot project the government will devise shale oil/gas policy to formally invite the local as well as international E&P companies to invest in the sector, but the E&P companies can start exploration of shale oil/gas on blocks already allocated to them. Considering the grim situation it is need of the hour to set up an autonomous department to look after shale gas resererves and start exploration with the assistance of foreign experts.

Naeem Qureshi.







Editorial November 2015

Burgeoning Corruption In Power And Gas Sector

Dear Readers.

The leader of Pakistan Tehrek-e-Insaf, Imran Khan has alleged that the present government is far more corrupt than the previous regimes. Whatever is going on in power and gas sectors somehow proves the claim as irregularities of around 980 billion rupees have been unearthed in entities working under the Ministry of Water and Power, including Water and Power Development Authority and other power companies by the Auditor General of Pakistan (AGP) for 2013-14, and the AGP further observed over 4.2 trillion rupees unsettled backlog from the past few years. This amount is simply mind boggling given the fact that the energy sector's inter-circular debt, long acknowledged as the factor that accounts for the sector operating well below capacity, is at most less than half of this total and our total annual budget is only four times this amount.

The AGP usually audits around 10 percent of accounts of any entity; however, if the audit reveals massive irregularities then it can audit up to 50 percent of all accounts. In other words, even if one assumes that 50 percent of energy accounts have been audited the amount of irregularities may well be considerably more than what has been unearthed. Reports by AGP - fairly non-partisan in a country where nepotism in key appointments remains the norm - have been traditionally ignored by the government of the day.

Members of the Opposition do take them up at the appropriate for a, including the Public Accounts Committee that, subsequent to the Charter of Democracy, is chaired by the Leader of the Opposition in the House; yet as is the lament of all committees of parliament headed by members of the opposition the attendance by relevant ministers and secretaries is poor. The PML-N came to power after what was regarded in 2013 as a five-year period of PPP corruption/inefficiencies epitomized by severe energy shortages leading to 12 to 14 hours of load-shedding daily. More specifically, the rental power projects agreements were successfully challenged in the courts by the man who is currently the Minister for Water and Power Khawaja Asif.

What is significant is that in the face of controversy the PPP allowed it's then Finance Minister Shaukat Tarin to prevail and agreed to carry out a third-party audit whose findings went against the proposal. Currently, the import of LNG has become highly controversial and the acting MD of SNGPL in her dissenting letter, after her predecessor was reportedly compelled to resign, stated that the reimbursement agreement is crucial as it would ensure that the risk of default in gas supply would be passed onto the relevant entity and not be unfairly borne entirely by SNGPL.

Unfortunately, however, neither the Finance Minister nor the Water and Power Minister has expressed a desire to hold third-party audit on the matter and instead public functionaries are opposing the deal. In addition, the Sindh government has requested a Council of Common Interest (CCI) meeting to resolve the issue of LNG imports being fed into the SSGC system and providing gas sourced to Sindh to the deficient Punjab instead of the much more expensive imported LNG.

Circular debt during the PPP tenure was first parked in a newly-established holding company but due to lack of improved governance it began piling up the very next day requiring Ministry of Finance's unbudgeted injections to enable the Pakistan State Oil to import fuel. That situation remains prevalent today indicating a lack of any improvement in governance and this is in spite of the minister as well as the minister of state for Water and Power creating provincial disharmony by accusing other provinces of supporting energy thieves and claiming that they have disconnected those feeders where receivables were in excess of 90 percent. No one knows what would be the volume of looting and plunders in power and gas sector alone when the present regime would be calling it a day, or kicked out of the power.

Naeem Qureshi.




Editorial May & June 2015

LNG Deal, Minister's Mysterious Silence

Dear Readers.

The goverment's silence over the Liquified Natural Gas (LNG) Pak-Qatar deal is more than just business. It is quite understandable that despite repeated demands from the stakeholders Minister for Petroleum and Natural Resources, Shahid Khaqan is yet to come out to brief the detail openly and eliminate all gossippings. Under the US$22 billion deal Qatar will supply 500 million cubic feet per day for fifteen years. The Pak government's policy of not disclosing the price per MMBTU has created doubts in the minds of many that it may not be in the best interest of the country. There are now not just doubts about the petroleum minister's role but also of Prime Minister Nawaz Sharif's part in the pact. It is said the PM was involved in the final settlement of the terms of the agreement.

Transparency International has reportedly written a letter to the relevant ministry saying that the LNG deal with Qatar is not according to the rules set by the government of Pakistan. It has made the people more uncertain regarding contents of the agreement. Moreover, the government has so far refrained from taking the National Assembly and Senate members in confidence on the matter,. While one wonders what is the purpose of the Parliament if its members cannot look at our agreements with foreign nations, especially, when it is not a defense deal wherein secrecy maybe of primary concern. It should have been that such big deals were rectified by the Parliament before final signatures were put placed on the documents. It is also the people's right to know what kind arrangements their rulers are making with foreign nations. It is not enough that ministers of the PML-N government say the deal is in the interest of Pakistan. Maybe, it is but then why hiding it from the people.

It is not just this deal, the attitude of our elected governments is that once elected they get the unqualified authority of doing what they please regarding the responsibilities of their offices. That, however, is not so. Whether it is the treasury benches or the opposition MPs, they are accountable to the people during the terms they serve. By all means, the deal should have been transparent; instead, it has acquired the status of a clandestine agreement. Another necessary detail that should have been known to the people is the price flexibility clauses in the agreement.

Though assumption is that such a clause would be in the agreed documents, as it safeguards the interests of both the nations, nevertheless, the people don't know. While the people of Qatar because of their different form of government may not feel the need to know the details, Pakistanis not only feel they ought to know but that they have a democratic right to be in the knowledge of such matters. As the talks for the LNG deal began some months ago, it was reported in a section of the press that Pakistan will be buying LNG at $14.5 per MMBTU from Qatar while India already had a pact with that country to get it at $9.5 per MMBTU. At that time oil prices had just started to slide down in the internationally. The argument was that since LNG rates were closely linked with oil prices, Pakistan should get LNG cheaper instead of about sixty percent higher than what India was getting.

But even then Petroleum Minister Khakan Abbasi was talking general terms. The Minister just kept telling the media that the price at which Pakistan would be getting LNG from Qatar was lower than what was being reported but he was not coming forth with his figures. However, Prime Minister Nawaz Sharif had once while talking to news persons shown irritation regarding the reports of changing the route of the Gwadar Economic Corridor and in this context had also mentioned the rumor about Pakistan purchasing LNG at high price was incorrect and that the rate was actually fixed at $6 per MMBTU. If it is so than why is Petroleum Minister Khakan Abbasi never said that 'it is so' and why is such a statement not made by him on the floor of the Parliament. Why create unnecessary doubts in the minds of the people. People demand an immediate disclosure of the details of this agreement or it will be considered an illegal concealment of facts.

Naeem Qureshi.




Editorial March 2015

LNG Import in Disarray

Dear Readers.

The present government even after two years governance and all types of tall claims, miserably failed to resolve any public issue particularly the chronic energy crisis prevailing almost aver a decade. People knew well that PPP government had no intention to resolve any public issue but the PML-N leaders had won the elections by virtue of their campaign to resolve all public issues particularly the ongoing energy crisis.

But whatever has been done by the present government contrary to the claims was hotchpotch, PML-N rulers are more interested in importing (liquefied natural gas) LNG as they expect more and more commissions and kickbacks in every LNG deal whether in public or private sector. But it seems that even the LNG import and setting up LNG terminals is in disarray.

The fact that the country's first consignment of LNG is now weeks away from landing should have been cause for cheer, had it not been for the many little glitches that still remain. The LNG project has been almost a decade in the works - far too long considering it is a very basic technology. Equally basic, unfortunately, are the issues that still mire prospects for the arrival of the first cargo. The construction of the terminal and its smooth operation are not in doubt.

A long-term arrangement for the supply of LNG also appears to be taking shape, although it is not as yet a reality. In the meantime, there are a few rather basic questions, such as who will pay for the first consignment that will have to be ordered soon. One would think such an elementary matter would have been sorted out by now. After all, the government had been going on about the project for months while construction of the terminal was hustled along its timeline.

But all that trumpeting of the project, it turns out, was more air and less music. Construction of the terminal was never part of the government's portfolio of responsibilities. Perhaps that is why it has proceeded smoothly.

The government's job was to put in place the policy framework under which parties, public and private, could contract cargoes and have them transmitted up to the point of consumption. Very little of that work has been done.

Today, we have a situation where PSO is not keen to pay for the first consignment of imported LNG. The buck, therefore, passed to the two distribution companies - SSGCL and SNGPL - both of which are also reluctant to pick up the tab.

Further, no agreement exists on the profits each of these three parties will be allowed to make for their part in the chain, with implications for end-user pricing.

Meanwhile, without a proper third-party framework for use of the transmission companies' pipeline infrastructure, private parties, such as the CNG sector, are also unable to import their own cargoes. Power plants that are interested in importing LNG are discovering that there is no agreement on what mechanism will govern the payments they receive from the finance ministry to pay for these imports.

We believe that the petroleum ministry has not worked through much of the policy software required for making LNG imports work. Either they are too busy, or are living up to the reputation of ineptitude they acquired during the recent petrol crisis.

Naeem Qureshi.




Editorial January 2015

Falling Oil Prices, Consumers Breathe Sans Relief

Dear Readers.

Amidst falling global oil prices, the present government is making the mockery of the poor consumers by giving just a pinch of price differential at home while the entire world is enjoying the relief of reducing prices of petroleum and its impact of other sectors as well, the people of Pakistan remain under siege of rulers' wrath.

According to the oil market the price of oil has gone down to over 50 per cent since it started falling about three months to four months back and now ranges at less than $56 a barrel in international market while the oil producers particularly Saudi Arabia, Nigeria, Algeria, Iraq etc. are pumping oil unstoppable, the experts expect the decline to even go down to $40 a barrel by the mid of current year or even before that period. The oil prices have declined insignificantly by over 50 per cent in just six months period from $107.89 a barrel reached in June 2014.

In such a scenario, the most painful factor is the government's stubbornness for not to provide the level playing field to the trade and industry and the general masses who were longing for taking some sigh of relief from unbearable cost of living and doing business. The price drop is the consequence of a complex interaction between a slowdown in global demand, the shale oil revolution, Saudi Arabia-Iran fracas and a general move from monopolistic-cartel oil pricing to a more competitive, marginal production cost based market pricing.

Pakistan's annual oil bill is going to come down by $5 billion or even more. What will Pakistanis get out of it? The answer to that question depends on how the Government of Pakistan decides to apportion the $5 billion bonanza. The government has at least three wide-open options to choose from: keep most of the $5 billion to improve its current account; keep most of the $5 billion to bring down its circular debt or pass the bonanza down to the economy, increase disposable incomes of average Pakistanis and, in return, stimulate economy-wide growth.

It is simply termed the cruel act by the present regime which has not only provided proportional reduction in the price of POL but no relief has also been given to the electricity tariff despite the fact that prices of furnace oil has also been dropped to less than $350 metric ton but the government instead of reducing electricity tariff as per the furnace oil's prevailing in the market contemplating to further increase power tariff which should be condemned by every faction of life. Cheaper utilities as per international prices are the constitutional right of a consumer and any move of depriving the nation from this right would be unconstitutional.

Naeem Qureshi.




Editorial November 2014

Privatization of OGDCL

Dear Readers.

Though conflicting statements from the government side are being issued regarding the privatization of Oil and Gas Development Company (OGDCL), it seems inevitable that the government would go ahead with its plan to divest 7.5% stakes in the OGDCL in order to secure the next $1.1 billion tranche of the International Monetary Fund (IMF) loan.

OGDCL is another milking cow for those eyeing on its sell-out at throw away prices as done in the past with all such public sector organizations, the Privatisation Commission (PC) Chairman Muhammad Zubair has indicated the next tranche of the $6.7 billion bailout programme was tied up with the OGDCL transaction.

"Yes, it is a depressing time, it isn't the right time for a capital market transaction but the government does not have the option of postponing the deal," Zubair said. He further disclosed that the transaction would be carried out at London Stock Exchange and Karachi Stock Exchange (KSE) simultaneously. However, the change in OGDCL's share value has so far resulted in the anticipated loss of over $100 million or Rs10.3 billion.

The OGDCL transaction has been planned to arrange funds for budget financing besides shoring up foreign currency reserves that are again on the decline. The reserves held by State Bank of Pakistan (SBP) decreased to $8.568 billion by October 24 - a dip of $219 million in a single week, as per claim by SBP. Whatever it is, the most important thing at the moment for the government is building foreign exchange reserves as the situation was precarious and urgent, he argued.

But on the other hand, the State Minister for Parliamentary Affairs Sheikh Aftab claimed on the National Assembly floor that the government has no plan to privatise OGDCL and no employee would be laid off.

On various points of orders raised by the opposition members, he said that neither OGDCL were being privatised nor any programme of workers retrenchment was on card. He said that the government was fully cognisant of the workers' rights and every step would be taken for protection of workers' rights. "Employees of the ODGCL were well aware of the fact that the government has no plan to privatise the company and that the employees were reacting just for nothing.

"Under, the Prime Minister’s Vision, Pakistan will get rid of not only power load shedding forever in 2018 but also there will be chain of road networks, vibrant industries and abundant job opportunities".

On the other hand, the Peshawar High Court had already restrained OGDCL from selling shares worth Rs350 million till the next order of the court. The KPK Government in its petition has argued that the government is secretly going to sell OGDCL shares.

It is fact that after the 18th Amendment, the provincial government has 50% shares in all resources of the company but the federal government has not consulted the K-P government or brought the issue up at the meetings of the Council of Common Interest.

The OGDCL is the national oil and gas company of Pakistan and the flagship of the country's exploration and production sector. It produces 4,400 barrels of oil from different parts of the province on a daily basis. This is 50% of the oil being produced in the country.

Despite all assurances it was evident that the federal government has to sell 7.5 per cent shares of OGDCL in order to fulfill its international commitments, however, the patriotic circles in the country are extremely against the selling of any strategic resources and those public sector organizations that are sensitive in nature and should remain with the government. Nowhere in the world organizations like OGDCL, PSO, Railways, PIA, Pakistan Steel, water and power resources are allowed to be privatized as they are strategic in the defense point of view as well.

Naeem Qureshi.




Editorial May 2014

Govt Testing Time Begins to Control Energy Crisis

Dear Readers.

The government honeymoon period is over with the arrival of May and its real test has commenced to steer out energy crisis with sustainable solution from short-term to long-term basis.

The worst season of load-shedding has started off crippling economy and lives of the citizens mercilessly but there is no respite visibly and the circumstance will continue this year for next five to six months.

It is true in fact that the rising mercury boosts up the temperature of the nation in the form of agitating protests and harsh criticism in the public and mass media which shape its performance index and credibility among the people who voted it with high expectations.

Prime Minister Nawaz Sharif efforts to hold emergency meeting is welcoming which chalked out measures for generating additional 1,000 MW into the national grid. However it will reveal in months to come that how the government could get success in its strategy and maintain peace and discipline in the economy and society.

The series of cutting-ribbon ceremony is unabated as the government kicked off LNG import project and regained little success over restoration of Iran Pipeline projects. Besides, inauguration of many projects like 660 MW coal-based power plants at Bin Qasim, Karachi and Quaid-e-Azam Solar Park in Bahawalpur set to generate 100 MW this year and 1,000 MW by 2016-end.

There is a need of expedite development works on the planned projects because it costs billions of dollars to the economy for one day long-hour load-shedding with far reaching affects on the future of the country.

Government should come up with emergency and solid plans including daylight saving and electricity conservation plan for providing quick relief to the masses and industries as well.

It should control issues like land losses and recovery of bills from commercial and industrial sectors to permanently finish the menace of circular-debt which piled up again to cross Rs 300 billion in accordance with the predication of Energy Update.

The practice of justice and technical advancement in the system could prevent the energy sector to do away from the losses, otherwise, the circular-debt will come again and again in the future.

Energy update has completed eight years of its publications in Pakistan in which it gained reputation and recognition from different quarters of energy sector at national and international level. We have covered issues related to energy sector in details like no one else did in Pakistan. We inform, we educate and we predicate the present and future of Pakistan's energy sector in sophisticated and scholastic style.

Naeem Qureshi.




Editorial Aprial 2014

Economic Stability Impossible Sans Energy Development

Dear Readers.

The surprising inflows of the $1.5 billion from the brotherly state of Kingdom of Saudi Arabia has dramatically changed the economic scenario of the country for few next months as Rupee recovered its values sharply against the Dollar to stand below 100 level.

The dialogue process with Taliban has continued despite many ups and downs but any settlement either for short-term period will give a chance to government to buy a time and address its rest of governance issues chiefly energy crisis for economic stability.

Billion dollars inflows are expected more from different Middle East countries in the coming months. There will be tranches of Coalition Support Funds (CSF) of $ 1.2 billion are likely in the current financial year. The sale of 3G/4G licenses and privatization of different government entities will attract billion of dollars into the national exchequer this year and major microeconomic indicators will be settled in quite stabilized position for next two to three years.

This is the high time that the PML (N) leadership and economic managers should utilize to take major and long-term initiatives to end energy crisis of the country in phases. Now, the government has plan, money and opportunity to do away the menace of circular-debt in the energy sector that piled up again to Rs 271 billion as per predicted by many experts of energy sector in the past.

The economic manager should carry out extensive steps to maintain financial management in different entities and various sectors of energy including power producers, refineries, oil marketing companies.

There are different projects in the queue to be started in the near future including the much-delayed LNG project, which should be kicked start, come what may, through adjustment of feasible pricing should be best suited as described by experts at $10-12 MMBTU or at par dynamics of global market trend.

Thar coal-based power projects should be started on war footing besides different power projects to be have been announced by the government in recent past. Because this is the ideal time for the government to make implement its Power Policy 2013 and attract local and foreign investors for the development and expansion of power sector whether they are being converted to coal-based power producers from natural gas or they should be established on the basis of solar or wind energy.

The foundation stone of different project should be laid down for their timely and quick completion including K2-K3 Nuclear Power Project and TAPI gas pipe line projects.

The private sector should be facilitated into fast track basis for the development of infrastructure of energy sector such as LPG autogas project and oil and gas exploration sectors because the rupee strengthening has given them opportunity to stakeholders to import resources at relatively reduced capital for materializing their business plans.

Last but not least, Rupee appreciation against Dollar will reduce the import bill of oil of the country significantly. Hence, the government should pass on the impact to consumers in every month without any hesitation that will create a positive impact at wider scale from controlling inflationary affect over the consumers to stir up economic and business activities.

Government should scale down prices of petroleum products ensuring its impacts to be transferred to the masses in all sectors from airfare to electricity cost, transportation expenses to commodities prices of essential chicken times.

The resolution of energy crisis and its self-sufficiency will lead towards stable and strong economy for developing, prosper and true welfare state of Pakistan.

Naeem Qureshi.




Editorial February 2014

Adhocism Aggravating Energy Crisis

Dear Readers.

Government’s adhocism policy has ruined the functions of Public Sector Entities (PSEs) without permanent heads. It seems that PML(N) is lacking a competent team of experts at the top or the will of appointing capable and talented officials in State corporations to pursue their own hidden agenda.

More than seven months have passed and all that the government did was to appoint CEOs of PSEs on temporary basis who naturally failed to deliver, indulging in non-productive activities or peripheral tasks at the expense of country.

Similarly, the bureaucracy has been shuffled in a manner that many of the officers are unaware of their fate or about their next assignment in other ministry or department .Hence neither the bureaucracy nor the management at PSEs are committed to their work, or performing duties, causing collapse of vital organisations which in the past have been contributing to exchequer, but are now mere want to use their offices for a pastime.

The plight of these public sector organisations in energy sector were hit far more harshly, suffering from gross public neglect.Financial liabilities mounted, and operational segments suffered beyond imagination.

The situation is pathetic and anticipating that the government’s intention towards honoring promise of public service is now a distant dream. The performance of these corporations, especially in energy sector, in linked closely to country’s economic health. A total insensitivity is evident, which would not do us any pride. Its priority is to deal with the Taliban issue.

The present government’s policy theme—Economy, Energy and Extremism—should be equally reflected on its performance instead of focusing on one issue of extremism which is beyond its control because of international factors.

Nevertheless the announcement of Power Policy was a welcome step. Resolution of circular-debt issue within 45 days was encouraging though its implementation requires solid will of those at the helm to rescue the countrymen from deepening crisis. Government’s adhocism philosophy caused accumulation of circular debts to a horrifying level of Rs 280 billion again which we had earlier predicted. Likewise, multiple crisis in energy sector will re-emerge with much more graver intensity than seen for last several months.

The menace of persistent and never-ending load-shedding of natural gas for, different energy sectors, hopefully, will reduce in next two months but the scenario of power outages for long hours will resume once again, which unfortunately seems to have become a permanent feature. The country has continued to suffer from one crises to another, with no end in sight.

With the beginning of new calendar year, the government must decide its direction and appoint a capable team of officers who not only can improve the efficiency of PSEs but also reduce corruption culture in various government departments.

Naeem Qureshi.




Editorial November 2013

Govt. Throws Cold Water on Future Energy Projects

Dear Readers.

The political leadership's failure of strategy left all the nation in the lurch as both United States of America and Iran have isolated Pakistan in the state of deep energy crisis with dying hopes.

USA is reluctant to sign Nuclear Civil deal with Pakistan even though it is not interested to make headways on important issue which had been much anticipated to be discussed in the first official meeting of Pakistan Prime Minister Mian Muhammad Nawaz Sharif with President Obama.

In dramatic move, Secretary of State John Kerry, in his visit in August, made a dramatic offer to Pakistan of nuclear civil energy deal in the greater interest of relationship between two countries but Pakistan premier's visit was seen highlights of old issues such as drone attacks, terrorism and exports promotions.

On the other side of the coin, the statement of Iran minister for ending Iran-Pakistan pipeline project have lost remaining opportunity for the country to get lifeline of energy for its ailing economy depending on foreign aids, grants and assistances.

The government has been in the middle between the two options whether America or Iran since its formation and followed the strategy of previous government to lose all options ultimately. It has never allocated funds for IP project in the recent budget nor seemed serious to pursue its financing and completion in true letter and spirit but continued flop diplomacy which did not bore any fruit for the nation. The government announcement of exorbita

nt power hike sent shockwaves to the masses having paralyzed already with prolong electricity outages although the intervention of apex court is commendable and timely which is ultimately proved once again as savior of the nation however the fear is still prevailing among the masses for astronomical price hike.

Increase in electricity prices to manage finance of energy sector is not a wise or long-term step but it is a brutal measure at the expense of nation. The government must address issues of energy theft, though mercilessly and tactically, besides the line losses and mismanagement in distribution should be reduced. Further, the power generation should be ensured with bringing efficiency at power plants and setting up new projects for meeting electricity requirement of the present and future as well.

The resolution of the energy crisis is paramount but it is an arduous task to make a country self-sufficient by itself without any support of US and Iran. We should stand on our own foot not in energy sector but in all aspect of lives. As a nation, we have almost burnt our boats now and we should rely on our own resources through utilizing coal reserves and building dams come what may for keeping the country alive and prosper.

Naeem Qureshi.




Editorial September 2013

Byco Eyes To Enhance its Operations in Pakistan

Dear Readers.

With the establishment of Pakistan's largest refinery, Byco Oil Pakistan Limited (BOPL) is all set to increase its market share in Pakistan through tapping all potential of local markets through its enhance refinery units and spreading retail points. The new refinery plant has been started its test production of petroleum products in March is likely to start its commercial operational soon. The new refinery plant has a capacity of 120,000bpd would yield synergies for BYCO in addition to old plant having capacity is 35,000 bpd.

This new refinery will greatly enhance the domestic refining capacity, taking the current capacity of ~ 12.5 million metric tons per annum to ~ 18.5 million metric tons per annum and based on full throughput is expected to produce on an annual basis about 1.6 million tons HSFO, 2.4 million tons HSD, 1.1 million tons of MS and0.8 million tons of LPG.

It is very important to note that as all of these products are deficit and therefore, imported, the refinery will substitute imports by providing locally refined petroleum products. This will substantially help save foreign exchange for the Country and help move towards self sufficiency in refining capacity.

The management highlighted that one of the key issues faced by BYCO was higher working capital cycle. The minimum quantity of crude import ship is 600,000bbls. Thus, for old refinery, process cycle of one ship was close to nearly 20 days. With new refinery expected to commence its operations, both refineries will import crude collectively. From one ship of 600,000 barrels, 420,000 barrels will be taken up by new refinery while BYCO's refinery will take up 180,000. The management said the working capital needs would substantially reduce after the commencement of new refinery. Having 5 days inventory process cycle, BYCO's exposure to inventory gains/losses will be limited as price revision cycle is of 30 days and the company will carry 2-3 days stock.

BYCO has worked to shift its supply source from imported to domestically produced crude oil. The management has already completed contract with OGDCL for purchase of 5,500bpd oil. Isomerisation plant to support MS volumes BYCO refinery also has isomerisation plant with its refinery which converts Naphtha to motor gasoline (MS).

It will start production with new refinery commencement and will have capacity of 12,500bpd. Naphtha is a low margin product and all of its domestic production is exported for consumption of Naphtha crackers. However, MS has a higher demand domestically and its product margins for oil marketing are also higher.The unit will be able to process external Naphtha also and may procure Naphtha from other refineries also which is currently being exported.

BYCO Marketing Business
Byco Petroleum Pakistan Limited (BYCO) operating in two business segments, Oil Refinery Business and Petroleum Marketing Business. It has benefit of owning both oil marketing and refinery business as oil marketing business gets credit from other refineries which can be used to fund working capital of the refinery. BYCO marketing gets Rs 2bn monthly credit from refineries. BYCO refinery will also get 30 day credit period from domestic and foreign suppliers.

With new refinery supplies, other strategic sale agreements and 40 new outlets addition expected in FY14, management is eyeing a market share of 3.68% next year. The company will add outlets on highways mostly which has higher share of HSD sales. BYCO has added outlets gradually during the last few years. The company currently has ~230 retail outlets and a market share of 0.79%. The management is also focusing on improving brand image and presence in market by focusing on non-fuel businesses and other services. Margins are expected to stay at current levels or increase further.

Desulphurization unit of associated refinery to increase deemed duty whereas the government has recently offered an incentive of 1.5% incremental deemed duty to refineries for producing Euro-II compliant HSD.BOPL refinery also has desulphurization unit, which will also process diesel produced from BYCO's refinery (old refinery). The benefit of incremental deemed duty would thus be shared between BOPL and BYCO on diesel supplies from BYCO.The management suggested that they require a total of PKR25-27bn of working capital for operating both refineries. Rs 15 billion is required for old refinery (BYCO) and is available from banks while incremental Rs 12 billion is required for new refinery which shall be available over the next months weeks.

Terminal Operations
Byco Terminal Pakistan Limited (BTPL) is wholly owned subsidiary of BYCO. The company's operations include management of port and transportation facilities. The company will provide terminal services to both group refineries and charge fee which would be equivalent to the amount of gains from the terminal. With this facility, the company will have an edge over other refineries as crude transfer process from SPM to tanks will reduce to 2 day process as crude will flow through a ~15km pipeline. PARCO, another refinery gets crude to its refinery through a 700km pipeline while Pakistan Refinery Limited has to use bowsers. BTPL would help reduce transportation cost and thus government has agreed to provide returns for the project through IFEM. BTPL would thus get some share from IFEM pool which is built in pricing of POL products. Increase in gasoline volumes would increase gains for BTPL.

Naeem Qureshi.




Editorial July 2013

Govt. Seems Merciless To Resolve Energy Crisis

Dear Readers.

Masses are looking for the government to resolve the prevailing energy crisis at the earliest as per tall claims made by the Pakistan Muslim League (N) in its pre-elections campaign because the electricity and gas shortage of the industry has paralyzed industrial and economic activities in the country hitting hard the life of layman in every nook and corner of the country.

The new cabinet has come up with its strategy to resolve end energy crisis with major steps including the end of circular-debt within 60-day which is an encouraging step and must be completed given time by the government to retain its credibility and living hopes of its supporters and masses over it.

The government plans that it revealed in the budget to reduce load-shedding in the country with establishment of power plants and generating electricity through making existing electricity producing plants are laudable though it is arduous task to achieve but the disgruntled nation should give the government some space and time to honor its all promises within a rational timeframe.

However the government harsh measures for reducing subsidy on electricity and increase tariff rates gradually as part of the International Monetary Fund (IMF) negotiation will bode negative for the depressing masses which have already been suffering from high cost of living and low standard of lives.

The increase rate of GST on petroleum products, CNG and electricity had added fuel to fire to cost of utilities that pushed up inflation significantly on every sector with multiplier effect on retail prices of various services and products mainly few days ahead of Ramadan in which the price-hike on food items is witnessed widespread.

At least, the government should have been avoided impose taxes on utilities and petroleum products to relief the poor nation. People are now clueless how to manage their lives in the beloved country where the taxes are imposed on deprived class and relief is given to elite class in the policy of the government, and there is no guarantee of live and property in the state. The status quo remains stable and no change is visible in the life of common man except sacrifices and oppressions.

Keeping in view the fastest developments in energy sector, I am pleased to inform readers that an online version of Energy Update has been launched. Please visit: energyupdatemag.blogspot.com to keep yourself abreast with the news and information of the energy sector.

Naeem Qureshi.




Editorial April 2013

Challenges for Upcoming Government

Dear Readers.

Pakistan is embarking upon a new era after the general elections on May 11, 2013. The caretaker governments have already taken over at the federation and all provinces of Pakistan. Although the caretakers have a brief mandate of less than two months mainly to hold free, fair and impartial elections and hand over to the elected government, it faces mounting economic pressures as the outgoing government of PPP-led coalition government has left the country in a difficult economic situation.

The first gigantic task ahead of the caretaker federal government is to pay back the installments to International Monetary Fund (IMF) under the Stand-By Arrangement (SBA). Since July, 2012, Pakistan has already repaid $3.244 billion to the IMF on account of different loans. Remaining outstanding amount of IMF SBA programme has to be paid by Pakistan till September 2015.

The country's current account balance has already entered into the "red zone" witnessing a deficit of $700 million during the first eight months of the current fiscal year (July-February). It was last month only when the country's economic managers were taking comfort from a $ 62 million surplus in the dollar-hungry country's current account balance during July-January FY13. Pakistan has reached a critical balance of payments situation and will need another package from the International Monetary Fund before the end of the year to avert a crisis as Asian Development Bank (ADB) country director Werner Liepach has warned that Pakistan would need between $7 and $9 billion from the IMF to shield the economy.

The only encouraging sign is soaring remittances sent by overseas Pakistanis who remitted $ 9.235 billion back to their families with an average $1 billion per month. Last year during the same period these transactions were $ 8.593 billion. These remittances have given a small support to Pakistan's poor economy, but for longer term Pakistan would need to seek external support. Pakistan's new government would certainly take over in even more difficult situation as it has to prepare a new budget for the next fiscal year in a hurry with meagre resources available in the national exchequer. By the end of May this year new governments in the centre and provinces are expected to take over.

The main challenge for the new economic managers would be how to reduce the current account deficit, overcome the energy crisis and how to provide a relief to common people, who are suffering for long time due to soaring commodity prices and energy shortage.

In its last meeting, the outgoing National Assembly's Special Standing Committee on Energy Crisis held the PPP-led coalition government responsible for the energy crisis in Pakistan saying that despite spending billions of rupees, all departments of power sector remained a failure, thus the country had to suffer due to reduced production. Pakistan faced one of its most crucial gas crises, with the shortfall rising up to 1.8 billion cubic feet (bcf). The new government had to push harder to increase the gas production and also it would depend how Iran gas pipeline project is moving forward. President Asif Ali Zardari on March 11, 2013 formally signed an agreement with Iran to carry out the gas pipeline project to purchase 750 million cubic feet gas per day for 25 years. Despite the mounting pressure from the USA, if the project is completed the country would witness better situation.

All over the world, the governments are now promoting the use of alternate and renewable energy resources in the energy mix, in consideration of climate change and higher fossil fuel costs. Pakistan's renewable resources are estimated to be massive, with just solar and wind potential estimated at cumulatively 300,000 megawatts. The new government had to face the challenge to encourage the alternative energy.

Another major source for power generation can be coal as Pakistan is blessed with huge reservoirs of coals in Sindh's Thar area. The government at this point claims to be developing the area's infrastructure to generate investment, with road networks, electricity, communication, and other necessary facilities. However, the progress so far with regards to extraction is very minimal. It is essential for Pakistan to tap its coal reserves to efficiently solve its energy crisis to avoid depletion of other limited resources. The new government had to pay special attention on mining and power generation through coal.Pakistan-Iran Pipeline:

Naeem Qureshi.




Editorial February & March 2013

Burdening Oil and Gas Sector

Dear Readers.

The government has collected hefty revenue of over 358 billion from oil and gas in the first six months of the current fiscal year and if similar amount is gathered in the remaining half year, the total collection would be around Rs 716 billion for the entire year. This will be much higher of the targeted amount of Rs 590 billion for the entire year.

According to media reports, the government collected more than Rs 138 billion from six different heads of oil and gas during the period under review, showing a rise of over 106 per cent when compared with Rs 67 billion collected in the period last year.

This was in addition to about Rs 220 billion collected from general sales tax on oil and gas in first six months, putting the total revenue receipts from oil and gas at about Rs358 billion. As a result, the petroleum sector has emerged as the top revenue yielding sector for the government.

The government has collected Rs 57.6 billion as petroleum levy on oil products in July-December 2012-13 against Rs 20.3 billion collected during the same period last year, showing an increase of a whopping 184 percent.

Royalty on oil and gas stood at Rs 29.8 billion compared to Rs 26.4 billion in the first half of last fiscal year, an increase of about 13 %. On top of that, the government earned a windfall levy of Rs 11.4 billion during first six months of this fiscal year against zero collection under this head last year. Similarly, the government also bagged Rs 25 billion as Gas Infrastructure Development Cess (GIDC) against no collection last year because the GIDC was introduced with effect from July 1, 2012.

This is very unfortunate that instead of generating revenue through direct taxes from other segments of the economy, the government has chosen an easy way to revenue collection. One can recall the statement of Finance Minister Dr Abdul Hafeez Shaikh, two years ago when he said that the government would have no option except to generate revenue from petroleum products if it failed to impose value added tax (VAT) as promised with IMF.

But the economic managers must keep in mind that rise in petroleum prices has always pushed up prices of all the commodities, thus creating an spiral affect on overall price situation in the country.

This is a dangerous proposition and government must refrain from this practice in future. There has been a popular demand by all the segment of the society that government must reduce the rates of taxes and levies on petroleum prices to make petrol and diesel less costly for the entire economy as well as common man.

Naeem Qureshi.




Editorial January 2013

CNG Pricing

Dear Readers.

According to news report, the Oil and Gas Regulatory Authority (OGRA) has a submitted compressed natural gas (CNG) pricing formula with the committee appointed by the Economic Coordination Committee (ECC) of federal Cabinet, which is likely to increase end-user price of environmentally friendly fuel in the country manifold. It is feared that CNG prices would go up in the range of 60 to 80 percent parity with petrol or from Rs 30 to 59 per kg.

The recent proposal of OGRA has three options, one suggesting a 60 percent CNG-petrol parity or a rise of Rs 30 per kg to Rs 92.48 per kg from existing Rs 61.64 per kg while second option, advocating a rise of 44 per kg to Rs 108 under 65 percent parity. The 3rd option envisages a jump of Rs 59 per kg to Rs 121 per kg or 80 percent to CNG-petrol parity.

It seems that these proposed price structure in OGRA's recent submission to ECC committee is based on the old formula provided to the authority by Petroleum Ministry thus it can be rightly called as "old wine in a new bottle". It is feared that this formula will not be acceptable to the Supreme Court of Pakistan which had taken suo motto notice of the linking of price of domestically produced CNG with that of imported petroleum products and asked OGRA to independently prepare the new pricing formula.

The Consumers Rights Commission of Pakistan (CRPC) has also opposed this proposal, saying that CNG prices should not go beyond its current prices. The CRPC has also rejected auditor's report because audited CNG stations have failed to provide verifiable and complete set of accounts and evidence of expenditures. Insiders have claimed that these invoices and receipts lacked credibility as they were not supported by third-party validation. The CPRC is also insisting that CNG prices should be determined on the ability of purchasing power of end users.

It is time that the committee head by Law Minister Farooq H Naek should consider all the facts and figures keeping in view apex court verdict on CNG industry and protect all stakeholders specially end users and resolve the matter once for all to save this struggling industry. The CNG station owners should also keep in mind that if the end-user is not happy with CNG prices, they can turn their back to this fuel and go for petrol as a protest. This tend to isolate CNG station owners and make it easy for the government to fulfill its agenda to close down CNG sector and bury the investment of billions of rupees once for all

Naeem Qureshi.




Editorial November & December 2012

Tight Gas Production

Dear Readers.

A Polish oil and gas company, Polskie Gornictwo Naftowe i Gazownictwo (PGNiG), Pakistan Petroleum Ltd (PPL) and Sui Southern Gas Company (SSGC) have signed a gas sale and purchase agreement, aimed at supplying 30 million cubic feet per day (mmcfd) of tight gas to the gas utility company from Kirthar block located in Dadu district of Sindh.

Tight gas production from the Kirthar block, jointly owned by the Polish firm and state-owned Pakistan Petroleum Limited (PPL) will start, for the first time in country's history, in May next year. The price of tight gas will be $6 per million British thermal units (mmbtu) - 40% higher than the current gas price, but still cheaper than natural gas coming from Iran and the price offered to lure foreign investors under new petroleum policy.

In the beginning, two wells will produce tight gas, with output of 15 mmcfd each. The Polish firm and PPL will provide gas to SSGC, which will then be supplied to the industrial sector. The Polish firm has so far invested $40 million in exploration of tight gas from the Kirthar block and will drill more wells to find gas. SSGC, on the other hand, would lay a 46km pipeline costing Rs325 million to provide gas to the industrial sector.

This is very encouraging development. We have heard lot about the availability of tight gas in the country, but never seen steps to dig out this gas from the wells. According to initial estimates, Pakistan has more than 33 trillion cubic feet (TCF) of tight gas reserves.

The demand and supply gap for natural gas has been rising every day and there is a need to increase the availability of this economical fuel to meet country's need either by expediting exploration activities in the country or arranging its import from Iran.

The industrial and commercial activities can been boosted if tight gas is explored and supplied to utility company for onward distribution to industrial sector and power generation units. It is high time that the government must also attract other international E & P companies to explore tight gas and further enhance its production in the country to save the people, industrial and commercial sector from the menace of long hours load shedding and cutting huge oil import bill

Naeem Qureshi.




Editorial For September & October 2012

GIDC Lowered by 50%

Dear Readers.

The government has reportedly slashed gas infrastructure development cess (GIDC) from Rs 50 per million British Thermal Unit (MMBTU) to Rs 100 per mmbtu for the industrial use including captive power plants. The key beneficiaries are cement, fertilizer, and textile sectors. This is a good move as private sector has been pressing the government to either withdraw this surcharge or reduce it to a reasonable level.

The industry is burdened with all sorts of taxes and subjected to high cost of utilities. This enhances the cost of production of industry particularly export oriented industry which has to compete with cost effective competitors overseas. Most of our competitors get utilities at cheaper rates and therefore, are able to offer their products at much lower prices to foreign buyers than Pakistan. Trade bodies have been urging the government since long to cut rates of electricity, gas, water and fuels for making value added sector competitive in the domestic and international market.

However, there is a trade off. The cost of energy has skyrocketed worldwide. Every country has to pay a higher value for energy and therefore needs to offer lucrative package to exploration and production companies for finding hydrocarbon reserves. Pakistan's petroleum policy 2012 has offered lucrative incentives for E&P companies and Petroleum Advisor to Prime Minister Dr Asim has mentioned that the response from global E&P companies is quite encouraging. He was also quoted as saying that the money received under this surcharge will not go to government's kitty.

It is going to specific account for the upcoming energy projects like Iran-Pakistan gas pipeline, Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, LNG terminal. The Advisor is of the view that these mega projects would require huge investment and therefore, a sufficient amount should be earmarked in advance for the development of infrastructure for these projects.

Pakistan is hit by energy shortages, whether of gas, petroleum products or electricity. These shortages are forcing government to resort to energy load shedding to keep a balance between domestic consumers and industry. There is a need that this policy should be persuaded to the maximum and leading global E&P companies are convinced to under major exploration activities both on-shore and off-shore to discover oil and gas reserves. The policy has doubled the wellhead gas price for E&P companies, raising gas price to consumers by 100 percent in next one year. But, we have to keep in mind that if we need gas urgently, we need to offer higher prices to E&P companies.

Naeem Qureshi.




Editorial For August 2012

Us Support To Ease Energy Crisis

Dear Readers.

The US Congress has released $ 280 million as new US assistance to support Pakistan's energy sector projects including Mangla Dam improvement and infrastructure support and due diligence work of the Kurram Tangi Dam project. This support is expected to add 900 megawatts to the national grid by 2013, which will be enough to provide power to two million households and businesses.

A US Embassy announcement said early this month that relieving Pakistan's energy crisis was the top priority of our civilian assistance programme. This assistance has come at a time when Pakistan badly needs foreign assistance to overcome the worst energy crisis of its history. Pakistan has also received $ 1.18 billion under coalition support fund (CSF) followed by the singing of a recent memorandum of understanding (MoU) between Pakistan and US to facilitate the NATO supplies opened after seven-month blockade in the wake of Salala incident.

The power shortage has created a havoc for business and households alike in the country and there is no solution insight at least for a time being. Power shortfall reaches 6000 megawatts when water level declines in dams. Though the installed capacity is about 20,000 MW in the country, the power generation is restricted to 13,000 MW and 14,000 MW these days due to shortage of gas, costly furnace oil and mounting circular debt.

It is very unfortunate that despite presence of vast coal reserves of ignite quality, several governments did not use them for power generation in the last 60 years. Now, the present government has initiated serious measures to utilize coal reserves in Thar and at least three mining and power projects are coming on stream, but with snail pace.

A Chinese company has sought a sovereign guarantee from Pakistan for undertaking $ 3 billion joint venture between Sindh Government and Engro Power to generate at Thar coal field. The government is now willing to extend sovereign guarantee to this project. There is a need that infrastructure should be provided at the site on fast track basis and transmission line should be laid to connect power plants with national grid by the time these plants are commissioned.

Besides, there is a need that we must focus on alternate energy and incentives are offered to wind, solar and small hydel power units to encourage power generation through green energy and reduce oil import bill for improving Pakistan's balance of payment.

Naeem Qureshi.




Editorial For April May 2012

PM's Conviction

Dear Readers.

Though the Supreme Court of Pakistan (SCP) convicted Prime Minister (PM) Yousaf Raza Gilani as guilty of contempt of court and sentenced him symbolically for 30 seconds until the rising of the court, the verdict has created controversy among the legal community as well as general public. One segment is claiming that Mr Gilani will be disqualified from holding NA seats when the sentence is reached to National Assembly as well as Election Commission of Pakistan for further action, the other division is saying that the worst is over for Prime Minister after the symbolic sentence. Some legal experts are of the view that the Supreme Court has thrown the ball in the court of Parliament to decided the matter of disqualification of the Prime Minister after this verdict. They are also of the opinion that the symbolic sentence cannot lead to the disqualification of Mr Gilani as it requires a punishment of at least two years to expel him from the office. On the other hand, PM's defence counsel Chaudhry Aitzaz Ahsan has claimed that the court did not convict the Prime Minister under the original indictment and added another charge, i.e., scandalising, ridiculing or defaming the judiciary. In a press conference after the hearing, Aitzaz, amongst other things, read out a list of such questions which he wanted to contest in his appeal. His main thrust was on Article 10-A, introduced under the 18th Amendment, which reinforces the right of every citizen to a fair and free trial under due process. On this basis, Aitzaz had argued that the bench as constituted was assuming the role of judge, jury and executioner in its own cause, a position that sits uncomfortably with the provisions of Article 10-A. Let the detailed judgment come to see what future holds for the Prime Minister. Aitzaz has insisted that since the bench had itself initiated the contempt of court case, it was not within its purview to hear the case. But the seven-member bench brushed aside his argument. The verdict has triggered reaction in the country as PPP workers came out on the streets and forced market closures in different parts of the country and chanted slogans against the judiciary, but the Prime Minister said he will pursue legal battle against the verdict. This is a mature approach as the country cannot afford any adventurism or tension between the institutions at this point of time when the country is already facing other big challenges. A journey through energy crisis

High readers!

We are celebrating the 6th anniversary of Energy Update in May 2012. By the Grace of Almighty, we have assumed a distinction of being the largest circulated publication and the true voice of energy sector in the last six years with the help of untiring and dedicated efforts of our editorial team. We are publishing a special issue on this occasion which will include exclusive articles, reports and analysis from our editorial panel, comments from our readers about the magazine and messages from leading personalities, as well top bosses and senior executives from energy sector. We would like to have your candid views and comments on the quality of contents and bits and pieces, we carry in the magazine about various issues of energy sector. We would like to know whether you are satisfied with the coverage we are providing to the issues of oil and gas sector, alternate energy and environmental issues during this journey through the ups and downs of energy sector in Pakistan. We would also like to know whether our claim of calling ourselves as the "voice of energy sector" carries a weight. Through these lines we also encourage you to write a piece on your favorite topic for us and make your contribution towards improving country's energy scenario and highlight any issue you feel is worth highlighting. Looking forward to your comments Editor

Naeem Qureshi.




Editorial For February March 2012

Iran gas must to ease energy crisis

Dear Readers.

Prime Minister Yousaf Raza Gilani has asserted last month that Pakistan would go ahead with 2,100 kilometers long Iran-Pakistan gas pipeline despite international pressures. Pakistan is currently facing a mounting pressure from the US to shelve the Iran pipeline project, but Pakistan and Iran had already signed a sovereign-guarantee agreement on the project in 2009. USA is saying that IP is a bad idea and Pakistan must see other options to meet its energy requirements.

However, at a recently concluded trilateral meeting in Islamabd, leaders of Pakistan, Iran and Afghanistan had decided to expand cooperation and trade in the region. Pakistan and Iran had also expressed their commitment to the gas pipeline project.Energy hungry Pakistan is desperate to get natural gas through any source to run its power units, factories, automobiles and meet rising household demand, but only IP project is currently seen feasible among the three options under consideration by the government. Turkmenistan gas pipeline had to pass through war-hit Afghanistan, while import of gas from Qatar is a distant idea.

According to Iran, most of the pipeline work has been completed at their end. However, cash-stripped Pakistan would have to arrange funds to finance the laying of pipeline and other installations on its land to carry gas to industrial sites.
The project would cost $ 1.2 billion and provide 750 million cubic feet of natural gas exclusively to power generation plants for producing 5,000 megawatts of electricity.

Though Pakistan is also pursuing other projects including import of LPG and LNG to provide natural gas to industries and power units, their quantities are insufficient to bridge the yawning gap between the demand and supply of gas.
The government has to start Iran gas pipeline project now to get the supplies in 2015-16. By that time, the gas shortage is estimated to touch 2 bcf per day which means that Pakistan would need other projects to cater to the demand. No matter what, we need to shift our power units from costly furnace oil to gas to produce electricity at lower cost and reduce import bill to ease balance of payment.

Naeem Qureshi.




Editorial For October November 2011

Petroleum Price Drama

Dear Readers.

The National Assembly Standing Committee on Petroleum and Natural Resources has expressed its concern over rejection of OGRA's summary by the government for reducing petrol price by Rs 4 per liter last month and instead approving the proposal of Ministry of Finance for reducing price by Rs 1 per liter.

The NA body which met in Islamabad with Sardar Talib Hassan Nakai in the chair, the other day, protested over the rejection of its recommendation for bringing Oil & Gas Regulatory Authority (OGRA) and Department of Explosives under the full administrative control of Ministry of Petroleum & Natural Resources.

It is heartening to note that NA body has at least raised its eyebrow over this issue and pressed government to comply with its earlier recommendation. It is worth mentioning here that the committee had earlier recommended bringing OGRA under Ministry of Petroleum to amicably resolve the prevailing energy crises in the country and to end the anomalies in implementing government's energy policy. Although, this is not very surprising to learn that instead of Ministry of Petroleum and Natural Resources, the Finance Ministry is determining petroleum products' prices in the country, it is a dangerous phenomenon that instead of improving income through direct taxes, the government uses petroleum products as potential revenue source.

This has been a general public complaint that the reduction in petroleum prices is always a meager one while the increase is hefty all the time. This is contrary to the government's claim that the price increase or decrease in petroleum products will always be in accordance with the actual reduction or rise in international crude prices.
The government should not forget this fact that any increase in petroleum prices always has a spiral impact on general price level in the country as rise in petrol or diesel prices is bound to raise cost of production.

This is the reason why all the times, the business bodies and chambers make hue and cry over every increase in petroleum products' prices. The government should honesty pass on the benefit of reduction in crude prices to domestic consumers in full as it is passing the full burden of increase to them in case of crude price rise.

Naeem Qureshi.




Editorial For September 2011

LNG Policy Simplified

Dear Readers.

The Economic Coordination Committee of the federal Cabinet has approved a draft of LNG Policy, 2011, removing a condition that required companies to enter into long-term deals and have a minimum reserve natural gas capacity of 20 years for supplying LNG.

Energy experts have lauded the policy saying that removal of these conditions has made the policy more liberal and will expedite LNG supplies. Besides, this step will help the energy hungry country to meet its growing needs specially from power generating sector which consumes about 43 percent of the total domestic natural gas supplies.

According to a conservative estimate, Pakistan is facing a shortfall that often peaks at more than 5,000 megawatts per day in summer. Country's current gas production is around 4.5 billion cubic feet per day while consumption is estimated at 6.5 billion cubic feet per day, showing a shortfall of 2.0 billion cubic feet.
The policy has not only simplified the process of licensing, but also streamlined pricing issue, authorising OGRA to calculate LNG price in the country.It may be noted that a few potential investors had been struggling for long to set up LNG projects in Pakistan, but they lost money and precious time in fulfilling unnecessary requirement of too many regulators.

Unending bloodshed haunts Karachi
Businessmen have also joined political parties in their demand for calling the army to control non-stop killing of innocent people in Karachi as more than 100 persons were brutally tortured and murdered in the city.Unfortunately, it seems that the trade and industry hub of Pakistan has been left at the mercy of drug barrens and extortionists and there is no sign of any government whatsoever in the metropolis. Trade associations have observed a complete shutter down against the highhandedness of these extortionists and refused to pay "Bhatta" (extortion money) to them and asked the government to save them from this menace which is eclipsing city's trade activity.

It is high time that the government should take serious efforts to stop this bloodshed to normalize the law and order situation and deal with criminals, drug runners and extortionists with iron hand and without any discrimination and set aside compromises. This is the only way to bring back joy and lights of the city.

Naeem Qureshi.



Editorial For July August 2011

Menace Of Load Shedding

Dear Readers.

The current energy crisis has badly hit country's economy as well as its people. The duration of load shedding has crossed 18 hours in some parts of the country while the minimum period is 12 hours and that too during lean periods. In Karachi, the industrial and commercial hub of the country, load shedding period is touching an unprecedented 14 hours as Karachi Electric Supply Company (KESC) has recently announced to shut down its SITE power plant which was attacked by the miscreants some time ago.

The yawning power deficit, currently touching at 4,500 megawatts, is expected to further climb to new peak this summer, because of the reduced inflow of water in the reservoirs these days. The hydel power generation is feared to further decline as water flow situation is not expected to be improved in near future. Reduction of hydel generation put pressure on thermal units to buy more furnace oil or gas which are not easily available due to mounting circular debt in the country.

Oil and gas selling companies need money to pay at least partial payments to their suppliers regularly, but they are finding it difficult under the present circumstance as the government, the largest indebted entity, has no money to pay to them as a difference of buying and selling price.Unless, the issue of circular debt is amicably settled, the power generation through fossil fuel is not going to be improved in near future and as a result, the distribution companies will continue reduced power supply to industrial units particularly export oriented industries including major export earner textile sector which is forced to cancel export orders.

Apex trade body FPCCI and leading chambers including premier Karachi Chamber of Commerce and Industry have been time and again urging the government to ensure the uninterrupted supply of electricity and to industrial sector to enable exporters to meet supply deadline from domestic and foreign buyers. Domestic consumers are also resorting to violent agitations against the long hours load shedding as residential areas face six to eight hours long breakdowns that disrupt all their routine activities. Above all the high voltage fluctuations are destroying home appliances.

There is an urgent need to address the issue of circular debt as promised in the recent federal budget speech of Finance Minister Dr Abdul Hafeez Shaikh and arrange payment at least half of the stuck up amount. At the same time, the government is required to expedite work on Thar coal projects and gear up activities regarding the basic infrastructure needs at the site.

Naeem Qureshi.



Editorial For June 2011

Menace Of Load Shedding

Dear Readers.

The current energy crisis has badly hit country's economy as well as its people. The duration of load shedding has crossed 18 hours in some parts of the country while the minimum period is 12 hours and that too during lean periods. In Karachi, the industrial and commercial hub of the country, load shedding period is touching an unprecedented 14 hours as Karachi Electric Supply Company (KESC) has recently announced to shut down its SITE power plant which was attacked by the miscreants some time ago.

The yawning power deficit, currently touching at 4,500 megawatts, is expected to further climb to new peak this summer, because of the reduced inflow of water in the reservoirs these days. The hydel power generation is feared to further decline as water flow situation is not expected to be improved in near future. Reduction of hydel generation put pressure on thermal units to buy more furnace oil or gas which are not easily available due to mounting circular debt in the country.

Oil and gas selling companies need money to pay at least partial payments to their suppliers regularly, but they are finding it difficult under the present circumstance as the government, the largest indebted entity, has no money to pay to them as a difference of buying and selling price.Unless, the issue of circular debt is amicably settled, the power generation through fossil fuel is not going to be improved in near future and as a result, the distribution companies will continue reduced power supply to industrial units particularly export oriented industries including major export earner textile sector which is forced to cancel export orders.

Apex trade body FPCCI and leading chambers including premier Karachi Chamber of Commerce and Industry have been time and again urging the government to ensure the uninterrupted supply of electricity and to industrial sector to enable exporters to meet supply deadline from domestic and foreign buyers. Domestic consumers are also resorting to violent agitations against the long hours load shedding as residential areas face six to eight hours long breakdowns that disrupt all their routine activities. Above all the high voltage fluctuations are destroying home appliances.

There is an urgent need to address the issue of circular debt as promised in the recent federal budget speech of Finance Minister Dr Abdul Hafeez Shaikh and arrange payment at least half of the stuck up amount. At the same time, the government is required to expedite work on Thar coal projects and gear up activities regarding the basic infrastructure needs at the site.

Naeem Qureshi.



Editorial For April May 2011

What After Osama

Dear Readers.

Pakistan has been in the hot waters since the killing of US prime target Osama Bin Laden in his Abbottabad compound by US commandos early this month. Analysts say that this is the biggest blow to US-Pakistan relations after 9/11. The opposition and media in the United States and European Union are alleging Pakistan of complicity in this episode and demanding explanation about the presence of world's most wanted terrorist in its territory, particularly in the sensitive area. Republicans had already tabled a bill for the curtailment in US aids to Pakistan. However, US administration, specially Senator John Kerry, Secretary Hillary Clinton and other senior officials are defending Pakistan's case saying that it is already a victim of terrorism and has played a very important role in the war against terrorism and suffered heavy military and civilian casualties in last ten years.

US Ambassador to Pakistan Cameroon Munter has recently told senior retired military and civil bureaucracy and foreign relations experts at a private gathering that the only way forward in Pakistan-US relationship is through conversation, which means listening, sharing and finding the way to resolve existing difficulties. We have common goals and we need to work closely to articulate these common goals clearly. The road ahead will be based on the choices made by Pakistan and United States. Those choices involved the answers to questions that are raised by Pakistanis and Americans alike.

Both Pakistan and USA need to respond to tough questions of the vibrant society, the media and the politicians. This is also an opportunity for the leadership in Pakistan and United States to talk about how we can move ahead in a very constructive way. If we recall, Pakistan and United States were discussing development plan of 12 specific strategic groups including energy, education, health, infrastructure development under $ 7.5 billion Carry-Lugar Bill passed by US Congress in October 2009 for the next five years, when a CIA agent Ramond Davis killed two Pakistanis in a dramatic development in Lahore.

Pakistan and USA need to begin negotiations on these plans from where a close friend of Pakistan Richard Holbrooke had left them after his untimely death. Pakistan badly needed US support to lift its economy after devastating floods. The resumption of stalled talks between the two countries will be shot in the arm for Pakistan. We need to stop the politics of blames and renew our relations to the benefit of both the allies of war on terror.

Naeem Qureshi.



Editorial For March 2011

Safety of Nuclear PowerPlants In Question

Dear Readers.

The leakage of radiation from the sprawled Daiichi nuclear power plant of Tokyo Electric Power Company has once again raised questions about the safety of nuclear power units around the world. All the nuclear nations have ordered review of the safety arrangements in and around nuclear installations, power plants and isotopic medical facilities. US President Barack Obama has taken a lead among nuclear nations and ordered a comprehensive review of domestic atomic plants. Nuclear Regulatory Commission Chairman Gregory Jaczko said it could take weeks to reverse the overheating of fuel rods at the Fukushima Daiichi plant. "This is something that will take some time to work through, possibly weeks, as you eventually remove the majority of the heat from the reactors and then the spent-fuel pools,"

Yukiya Amano, head of the Vienna-based International Atomic Energy Agency (IAEA), called the crisis "grave and serious" and urged Japan's prime minister to release better information after arriving in Tokyo. Japanese authorities are seriously considering burying the damaged reactors in sand and concrete to prevent the release of radiation, the method used to seal huge leakages from Chernobyl nuclear disaster in 1986. However, the first priority is to cool the fuel rods before dumping them beneath the earth. At least 17 major accidents have been reported since 1952 at different nuclear reactors across the world, most of them at power plants due to cooling malfunctioning. The incident of Chernobyl in Russia is the worst among them. Interestingly, most of these incidents have occurred in most advanced countries like Russia, Japan and USA where the level of technology is very high and where safety measures are doubled checked.

The global environmental organizations including Greenpeace of USA are justified in raising voices against nuclear power plants and dumping of spent fuel. They have been opposing the use of nuclear technology and instead they prefer use of environment friendly renewable power energy to generate electricity. The cost factor of atomic power plants becomes irrelevant when it comes to the risk attached to nuclear technology and the impact of radiation on human body. This is high time that we in Pakistan should also consider these risk factors and prefer renewable energy to generate power instead of going for risky nuclear reactors for power generation.

Naeem Qureshi.



Editorial For February 2011

Prudent Advice

Dear Readers.

The newly founded Pakistan Business Council (PBC) has termed the state of the economy of the country as fragile and urged the policymakers to convene multi-parties dialogue on the economic reforms and develop a consensus on an agenda to steer out Pakistan of troubled waters. The PBC, comprising top entrepreneurs of the country observed that the situation was getting worst and problems like inflation, poverty, unemployment and crime would rise if concrete steps were not taken on immediate basis.

At a recently held press conference, these tycoons felt that the rampant government borrowing was the primary cause behind rising inflation and dwindling economic activities. “Heavy borrowing by the government has resulted in a classic crowding out effect, reducing private investment and demand for credit,” they have noted. This is true. The State Bank Governor has also raised alarm on the rising borrowing by the government and suggested a reasonable cut. Government borrowing has alarmingly soared to Rs 1.169 trillion in 2008/10 from Rs 207 billion in 2005/07 while private sector borrowing has squeezed from Rs 768 billion in 2005/7 to mere Rs 132 billion in 2008/10.

The entire business community in Pakistan is asking the government to improve the economy, cut down its extravaganzas, ensure uninterrupted power supply to industry and restructure state-owned enterprises to reduce hemorrhage on public money. The public sector enterprises are causing an annually draining of Rs 300 billion on public money. This needs to be slashed to reduce burden on national exchequer.

The IMF is suggesting the government to freeze its budget deficit to 4.7 percent of GDP to enable the Fund consider release of held up tranche of $ 1.7 billion under $ 11.3 billion stand-by arrangement. IMF has tied the release of tranche with the introduction of notorious reformed general sales tax (RGST) which had triggered enormous opposition in the country and forced the government to withdraw it decision.

The PBC has also asked the government to remove price distortion in the energy sector, sort out inefficiencies in production and distribution and must develop indigenous energy resources like hydel power and coal reserves to generate electricity. Ironically, the work on small dams is going at snail pace despite tall claims. Similarly, the infrastructure is not coming up fast in Thar coal field to support the investors. This needs to be expedited.

The good governance is a major weakness of the government. Despite repeated defeats at the hands of superior judiciary, the government has never stopped placing corrupt and non-professionals on top positions in state owned organizations. Only professional and honest persons should be appointed on top positions with the aim to restructure these institutions and improve their profitability.

Naeem Qureshi.




Editorial For January 2011

MQM, JUI Jolt Government

Dear Readers.

The decisions of PPP's coalition partners Muttahida Qaumi Movement (MQM) and Jamiat Ulma-e-Islam (F) to sit on opposition benches have not only jolted the government but also shaken the investors' confidence in the country. The stock market plunged on the news next day and 100 Index lost more than 200 points sending the negative signals inside and outside Pakistan.

Although MQM reversed its decision on the withdrawl of increase in petroleum products prices and the visit of Prime Minister, Syed Yousuf Raza Gilani to its head quarters, JUI is still reluctant to reconcile with the government. It seems that the government is losing grip on both political and economic affairs. The situation got more complicated when IMF issued warning on the deteriorating economic conditions in Pakistan.

The government's failure to properly manage economic affairs in the country is apparently owing to the absence of efficient economic team. It is obvious that Dr Abdul Hafeez Shaikh alone cannot deliver miracles without the support of other vital components of the economic paraphernalia including Secretary Finance, State Bank Governor and chairman Federal Board of Revenue. It is believed that things had started going out of control, when the Finance Minister Shaukat Tarin resigned from his post, apparently after failing to convince the government to cut their extravagant spendings.

The present economic team is also unable to stop the government from its excessive expenses and instead recommended printing of new notes to fund non development expenditures. The team is also unable to give any innovative idea, other than the controversial RGST, to collect revenues from wealthy people. Obviously, the influential landlords in the Parliament are not letting the weak economic team to tax their income. The investment scenario, which was somewhat improved after the IMF agreed to lend more than $ 11 billion under its standby support arrangement, has been disturbed again and investors specially foreign investors are reluctant to invest here.

This scenario is disturbing as lots of energy projects would be further delayed again, thus depriving the country from much needed electricity and other energy projects. This is high time that the government must improve its relations with its coalition partners and reshuffle its economic team to bring in improvement in the economy as well as investment climate in the country.

Naeem Qureshi.



Editorial For November & December 2010

Capital Flight

Dear Readers.

Federal Minister for Water and Power Raja Pervez Ashraf has been recently quoted as saying that the terrorist attacks in different parts of the country have not only fostered capital flight but also discouraged foreign investment in energy sector. Lately, Foreign Minister Shah Mehmood Qureshi has also endorsed his statement at the meeting of Pakistan Development Forum (PDF).

These kinds of statements are alarming at a time when energy-hungry Pakistan is eagerly needs foreign investment in the country to over come the current energy crisis, seriously hampering industrial and commercial activities.

The yawning power deficit of 3000 megawatts, which at time had climbed to a peak at 4500 MW, thus resulting in production cuts and forcing export oriented industries including major export earner textile sector to cancel export orders.

FPCCI president Sultan Chawla had urged the Commerce Minister at a recently held meeting in Karachi to ensure the uninterrupted supply of gas and electricity to industrial sector to enable exporters to meet supply deadline from domestic and foreign buyers.

He said that due to disturbed law and order situation, foreign buyers are reluctant to visit Pakistan and therefore, exporters have to meet them in Dubai or Singapore to negotiate business deals.

It is important to mention that the government should redouble its efforts to curb terrorism and arrest terrorists and criminals to improve law and order situation in the country for creating an investment friendly environment to stop capital flight. There are reports that potential foreign investors in Thar coal projects are also delaying their visits and considering to hold their projects till such time the law and order situation in Pakistan is improved.

This is a dangerous trend and would lead to hamper government efforts to attract investment for Thar projects and would delay completion of existing projects.


Naeem Qureshi.



Editorial For October 2010

Losses of Dams' Controversy

Dear Readers.

The discussion in the media on the construction of Kalabagh dam has been re-started again after a long interval. This issue was almost buried in the previous regime of General Pervez Musharraf, who had abandoned this project for a time being and laid the foundation stone of Diamer-Bhasha dam as a second option after failing to convince political leaders of various parties in Sindh, Balochistan and Khyber Pukhtoonkhwa, the then NWFP. Later, the government of Pakistan Peoples Party (PPP) also shelved this project for good.

It is interesting to note that Pakistan has spent almost 20 years in a furious, useless and result-less debate whether to construct Kalabagh Dam or not. This matter has been so politicized that three, out of four provinces, have developed a serious opposition to this dam and political parties including senior leadership of mainstream Peoples Party and nationalists do not want to listen to the name of this dam now. So much so, Sindh Assembly has unanimously rejected this dam and resolved that it will be built over their bodies.

Ironically, during this debate, the country has lost an opportunity to construct other large and smaller dams and water reservoirs in various parts of the country to store water and get cheaper electricity. Though, the present government has decided to go ahead with the construction of nine medium and smaller dams, there are news reports that these projects might not see the light of the day due to cost escalation.

This is a serious matter a needs a clarification from the government. If these reports are correct then it is the duty of all stakeholders to press the government not to abandon these projects because, we needs them for cheaper source of electricity as well as for water. This is a duty of the government to look into their costs and hire consultants for cost reduction.

There is also a need to construct water reservoirs in those vast areas where canal network is not available to growers and they use tube-wells which go dry during long drought period. This is high time that we should build small dams and water reservoirs to store water for irrigation and drinking purposes as we are going to face acute water shortage after the completion of various dams being built by India on Pakistani rivers in Kashmir.

Naeem Qureshi.



Editorial For September 2010

Transparency of Foreign Aid

Dear Readers.

President Asif Ali Zardari has recently told Karachi based television anchorpersons and newspaper editors that the government will ensure a greater transparency in the use of foreign aid for flood victims.

“The details on the inflow of foreign aid, its utilization and distribution should be placed on the website to ensure a greater transparency”. Quoting the example of his own daughter Bakhtawar Bilawal Bhutto Zardari, who is running an NGO “Save the Flood and Disaster Victims”, the president said that she had raised Rs 130 million and all the details of this amount is posted on the website of the NGO so that everybody can see it.

Well said Mr President. This is exactly what the nation is asking for. However, it is easy said than done. The Prime Minister Relief Fund Account has not been opened for the public to see how much amount has poured in and how much is utilized so far.

Opposition leader and former Prime Minister Mian Mohammad Nawaz Sharif had also asked the government to form an independent commission consisting of retired judges to monitor the utilization of foreign aid as well as local funds donated for flood victims.

This is a modern world and modern technology is being used in developed as well as most of developing countries to post all their accounts including incomes and expenditures on websites so that it can be approached by any tax payer and needy.

The lack of trust in the present government has forced many countries including USA, UK, Germany to use different United Nations arms and NGOs for the distribution of food, medicine and other relief work.

Naeem Qureshi.



Editorial For July - August 2010

Diamer Bhasha Dam

Dear Readers.

The Council of Common Interest (CCI) has given a unanimous approval to the construction of Diamer-Bhasha Dam, a pre-condition attached by the international lending institutions particularly Asian Development Bank to the funding of $ 8.5 billion project. At its first meeting held after gaining more powers under the 18th Amendment, the Council had approved the construction of the dam through a unanimously adopted resolution last month in the presence of Prime Minister Yousuf Raza Gilani and four provincial chief ministers.

Though the dam project had already been launched in the previous regime, its formal approval by the CCI would help seek foreign investment because the international community would get a clear message that it was a non-controversial project. The World Bank is reported to have asked the government to get approval of the project from parliament as a pre-condition for receiving finances.The dam, which has an expected completion date of 2019, would have a storage capacity of 6.4 million acre-feet of water and produce 4,500 megawatts of electricity. The dam is likely to pay back its cost within eight years after its completion.

The government must be lauded for this achievement which will go a long way in attaining self sufficiency in power generation and creating a sufficient water storage capacity for irrigation purposes for this power hungry and water starved nation. This also reflects the seriousness of the government toward building this dam. Some elements including World Sindhi Congress, are still opposing this national project. World Sindhi Congress has termed Bhasha Dam as illegal and a gross injustice to the historical and legal right of Sindhi people on waters of River Indus and urged international donors not to finance any water project on Indus River. The dispute between Khyber-Pukhtoonkhwa and Gilgit Baltistan over royalty is another issue which is confronting the project. However, there is a need that the government must take these people into confidence and tell them that this project had already been delayed due to several reasons. The delay has escalated its cost to $ 8.5 billion. Any controversy at this stage will further jeopardize the project and shy away investment by foreign lenders.

Naeem Qureshi.



Editorial For June 2010

Anti People Power Tariff

Dear Readers.

The apex trade body FPCCI has strongly opposed the increase in power tariffs by the National Electric Power Regulatory Authority (NEPRA) for Karachi Electric Supply Corporation (KESC), saying that this move will crush the national economy and further enhance cost of doing business in the country. The entire leadership of FPCCI including its Sultan Ahmed Chawla is critical of the government as well as NEPRA for increasing power rates. With the recent rise, power rates have been surged by 92 percent in the last two years.

The have alleged that NEPRA and OGRA do not bother to consult stakeholders before taking such decisions and therefore burden business community and masses. They called it totally unjustified and feared that it would also render export sector as uncompetitive in the international market. Other trade bodies have also opposed the new tariff and said they will protest against this anti-business and anti-people move which, in their opinion, will be the last nail in the coffin of national economy.

Consumer Association of Pakistan has also joined them with the resolve that it will gathered the support of political parties and masses and would not let NEPRA to implement this decision. The NEPRA has raised the power tariff for KESC in the range of 10 paisa to 1.77 rupees per unit against the fuel price adjustment for the months of July 2009 to March 2010.

The poor Karachiites will receive the electricity bills of November and December 2010 with the increase of Re0.79 and Rs1.57 per unit respectively against the fuel variation took place in the months of February and March 2010. The decision will be applicable to all power consumer categories except lifeline consumers from June 2010 to December 2010. The NEPRA said the total impact will be Rs 5.797 billion, of which Rs1.215 billion is on account of fuel cost component of KESC's own generation while Rs4.582 billion for fuel cost component of power purchased from external resources including IPPs, for the said period.
KESC consumers will start receiving enhanced electricity bills from June 2010 to December 2010 which will be without taking effect of transmission and distribution losses for monthly recovery from the KESC.

Here, it is important to mention that the business community would not bear this burden and, ultimately, transfer this rise to general public, which is already over burdened with the worst ever price hike.

Naeem Qureshi.



Editorial For May 2010

AJK's Power Generation Potential

Dear Readers.

Minister for Information Technologyy (IT) Azad Jammu Kashmir, Sardar Farooq Ahmad Tahir has recently said that his country has a potential to generate about 25,000 megawatts of electricity from hydel sources and can supply it to Pakistan at affordable rates.
He told the participants at a recently held conference that hydel projects for 10,000 MW of electricity have been identified by the government while potentials to generate more than 15,000 MW were there in AJK. The minister also pointed out that the initial cost of this electricity would be Rs 4 to 5 per unit for the first four to five years and later it will cost only 15 to 20 paisa per unit for the entire life.

He, however, noted with great disappointment that Pakistan government was not paying attention to this potential and therefore did not invite AJK representatives to recently held energy conference in Islamabad.
Pakistan has been passing through worst energy crisis of its history and badly needed electricity on immediate basis to cater to the growing demand by industrial, commercial and domestic users.
If this potential existed in AJK, it should be capitalized on urgent basis so that the country can have cheaper electricity, specially at a time when the thermal power generation cost is touching peak due to rising fuel prices across the glob, making energy mix rates in the country to reach unprecedented high.

In Pakistan, the construction of dams has become highly politicized and contentious issue and it does not seem possible to construct either Kalabagh Dam or Bhasha-Daimir Dam in the near future.
Similarly, it is not feasible to go for thermal power generation due to costly furnace oil. Availability of natural gas is also limited in the country and additional supplies cannot be provided to power generation units until its production is enhanced or imported from Iran.
Since the power generation through renewable energy is a distant dream, the only available viable option is to encourage hydel power generation in AJK and buy it at affordable rates. This can be the only practical solution available with Pakistan in near future under the current scenario.

Naeem Qureshi.




Editorial For April 2010

Shocking pollution levels

Dear Readers.

Climate change is degrading local environment that is posing serious threats to the health of the people and sustainable development, besides costing the national exchequer Rs365 billion every year or one billion rupees each day, pointed out Prime Minister Yousuf Raza Gilani at a recently held function on environment. Pollution includes air and noise pollution, water contamination, land degradation, industrial or vehicular pollution, waste generation or poor disposal system, deforestation. All are degrading climate change that is posing danger to the human life. President Pakistan Engineering Congress pointed out that environmental degradation is costing the country 6 percent of GDP.

According to the survey conducted by Pakistan Council of Research in Water Resources (PCRWR) water resources of Pakistan are facing four major water quality problems such as bacteriological contamination (28 to 100%), arsenic (0 to 100%), nitrate (0 to 50%) and fluoride (0 to 55%). The Survey showed that drinking water in most urban cities like Karachi, Lahore, Hyderabad, Peshawar, Multan and even Abbotabad and Islamabad have been found biological and chemical pollutants. The country is suffering an annual loss of Rs 120 million annually on account of water borne disease alone. Water contamination, effluent treatment and saving marine life are other challenges.

The present scenario is that forest cover is far less than the international standards and net forest coverage in Pakistan has reduced by five percent in recent years. According to 1992 statistics, natural forests declined by 3.5 percent and by another 3.4 percent in 2004.
In recent years environmental pollution, of all kinds has increased to alarming levels in the country. A report pointed out that UNESCO's standard of air quality is 35 microgram per cubic meter whereas Lahore has 150 microgram/cubic meter pollutants, followed by Karachi, with nearly 100 microgram/cubic meter. An ADB report says that about 22,000 premature deaths took place every year and another 700 children died due to high rate of air pollution.

Air pollution level is 4 to 5 times higher than the WHO standards. Air pollution level in Karachi and Lahore is estimated twenty times higher than WHO's standards and continuously increasing. More than 6.5 million persons are hospitalized annually due to air pollution related illnesses in Pakistan.
Although Pakistan is leading the regional countries in overall sanitation covers. Out of 3,000 tons, about 2,000 ton of solid waste remained unattended on the streets of Karachi and Lahore, respectively. Moreover, out of 190 ton of garbage disposed of every day includes 40 ton of infectious hospital waste. Fatal waste is also thrown in open areas, which has a mitigating effect on green house gas emissions.

Climate change is responsible for 300,000 deaths a year and is affecting 300 million people, a study indicated. The impact of global warming on the human life is that it increases severely heat waves; floods, storms and forest fires could result in as many as 500,000 deaths a year by 2030, making it the greatest humanitarian challenge the world would face.

Climate change is also causing economic losses, amounting to more than $125 billion a year, more than total world aid. A report came from the former UN Secretary General Kofi Annan's think tank, said that by 2030 climate change could cost $600 billion a year. The United Nations on November 21, 2007 officially launched the International Year of Sanitation to accelerate progress for 2.6 billion people, including 980 million children, worldwide who is without proper sanitation facilities. According to the UN every year inadequate water, sanitation and hygiene contribute to the deaths of 1.5 million children. 2008 was declared the international year of sanitation the main theme of the year set by the United Nations General Assembly was to put Sanitation at the forefront of the international agenda. The International Year of Sanitation also highlighted the need for investments in proper sanitation facilities around the world.

The world over, about 42,000 people die every week from diseases related to low water quality and an absence of adequate sanitation. A report said that clean, safe and dignified toilet and hand washing facilities in schools would ensure that girls get the education they need and deserve, said UNICEF. The Prime Minister of Pakistan said that we have to ensure cleaner environment for our present and coming generations. Therefore, international community, especially developed nations, should support the developing countries like Pakistan with financial as well as technical assistance. However, environment is given the least importance by the government, which is obvious from the fact that the Pakistan Environment Protection Council (PEPC) met after six year. Even it was postponed four times by the present government while it should meet twice a year. Although, the federal government of Pakistan has declared 2009 as the year of the environment, but no concrete measures had been taken at the government level to make green and clean Pakistan.

ADB report on "urban air quality management in Pakistan" observed that Pakistan Environmental Protection Ordinance 1983 was made effective after about one and a half decade, as Pakistan Environmental Protection Act 1997. The Environmental Tribunals Rules 1999 were made for Karachi and Lahore in June 1999, but could not started functioning before January 08, 2007, and that too with the orders of the Supreme Court of Pakistan. Every year, on June 05, the World Environment Day is celebrated in Pakistan, but without taking any solid and effective measures to address the issues. The Ministry of Environment has also declared 2007 as the 'Green Pakistan Year' but nothing happened to make the country green.
The cost of environmental neglect can be judged that health expenses increases, labour productivity decreases and estimated at $1.8 billion a year. The World Bank said that about 3 to 5 percent of the GDP is being lost on this account in Pakistan.

According to ADB report, carbon dioxide (CO2) emissions in 1995 were 85.4 million ton. Vehicles operating in Karachi add 275,000 ton of carbon monoxide (CO) per year. The noise levels in Karachi are far higher than the WHO limits.Pakistan generates 54,850 ton of solid waste per day. About 364 ton polythene bags are used daily in Karachi alone. Fertilizer off-take has doubled since 1992-93, presently used to about 4 million ton. Whereas pesticides/insecticides use has almost tripled since then. Tanneries located in Sialkot alone use 65,000 ton of hazardous chemicals per annum. Unprotected use and storage of such chemicals and dispersal of waste result in urinal infections and cause about 10,000 deaths in Pakistan every year.

There is an urgent need that all responsible stakeholders must participate in preventing environment degradation. For instance the industries releasing toxic effluents should install treatment plants. Hospitals must not throw away lethal waste that is causing diseases. The government should introduce Euro-II standards to control vehicles emissions and also take measures to make sulfur and lead free petrol, which would help cleaning the environment. Mechanical, electromechanical and chemical process equipment technologies for pollution control are already available in the country. The emission measurement and reduction equipment include ammonium continuous emission monitors, portable multi pollutant emission analyzers and controllers, NOX (nitrogen oxides) and VOC (volatile organic compounds) emission controls, sulphur dioxide and mercury control technologies, carbon capture and sequestration (process for removing carbon) equipment, and recycling systems for waste and water are also easily available in the market

Naeem Qureshi.



Editorial For March 2010

Power Theft Campaign: A Waste of Money

Dear Readers.

Karachi Electric Supply Company (KESC) and WAPDA separately have launched multi-million rupees campaigns on media against power theft after failing to get better results from ant-theft drives that included physical inspections of suspected sites.

According to feedback received from various quarters, the media campaign of KESC has fizzled out as hardly any response is received from public on power theft. The reason is the unfriendly and unpleasant relations of the utility company with its customers, mostly because of load shedding, over billing and frequent tariff rise.

Another reason is impression of KESC customers about its inability to strongly pursue its anti-theft drive. People know that they might get first response from the power thieves rather than KESC if they provide any information against the pilferage in their neighbourhood.

They also know that the power theft is continued all over the city in connivance with KESC's own staff that encourages the customers to use different tricks to get lower power bill.

A visit to various areas in Karachi specially suburbs will show that thousands of illegal (kunda) connections are in operation in these areas, yet KESC people do not see them and therefore do not take any action. KESC has so far taken action against a few people only, while the large number of power thieves is at large.

Utility company needs to carryout physical inspections of all these areas and utilize third-party intelligence to locate points of power theft rather than utilizing its own teams to hunt for pilferage.

Similar, is the case with WAPDA. The line losses of this big white elephant are also on a very high side, yet they have failed to take action against big thieves.

Both these utilities need to generate support from masses to get credible information about the thieves and then show their seriouseness in persuing stern action against all the power thieves. They also need to utilize the help of media in locating power theft points

Naeem Qureshi.



Editorial For February 2010

Massive Rise In POL Prices

Dear Readers.

The government has once again shocked Pakistanis with a hefty hike in petrol prices, thus dis-balancing their already messed up budget. This rise has hit common man, industrialist, businessman,

exporter, transporter alike.

Oil and Gas Regulatory Authority (OGRA) raised prices of petroleum products by 5 per cent to 9 per cent with massive increase in motor gasoline (petrol) by Rs 6.10 to Rs 71.21 per litre, HOBC (High Octane Blending Component) by Rs 7.41, to Rs 86.84 per litre, effective from February 1, 2010.

High speed diesel (HSD) price was raised by Rs 3.33 per litre to Rs 71.99 per litre, kerosene by 5 per cent to Rs 64.07 per litre, light diesel oil (LDO) by 5 per cent to Rs 61.07 per litre.

This massive increase has multiplied woes of the masses as the transportation cost of the goods would surge manifold and, therefore, foster inflation. The whopping rise has come as a surprise in the backdrop of sliding international oil prices. If at all, the government was bent upon to enhance petrol prices to raise its revenue collection, it could have been at a lower percentage.

This is alarming and would seriously hurt efforts of State Bank of Pakistan to lower its benchmark discount rates which help in bringing down the overall interest rate in the country. This policy rate cannot be lowered until the inflation rate is down.

All the chambers and trade associations have vehemently opposed this hike and maintained that it will further jeopardize all their business calculations and would negatively affect competitiveness of the exporters in the international market. The business community has been strongly lobbying for reduction in mark up to reduce production and improve their profitability.

On the other hand, the revenue collectors are happy that the government has made their job fairly easy and they would be able to meet the revenue collection targets set by the International Monetary Fund (IMF).

However, this is certain that this increase will trigger spiral inflation in the country and shoot up prices of all the commodities and services, thus further burdening the economy as well as the people of this country

Naeem Qureshi.



Editorial For January 2010

Happy New Year

Dear Readers.

The year 2009 has left behind many bad memoirs for the people of Pakistan. Besides, so many deaths of innocent people at the hands of terrorists all over the country, the year witnessed a daily basis load shedding of long hours. The last nail in the coffin was the gas load shedding in December which triggered a hue and cry, followed by the protest of CNG filling stations and a resultant strike call in entire Punjab and NWFP.

The minister for Water and Power Raja Pervez Ashraf kept on claiming throughout the year that load shedding will end by December 2009. But it did not happen. However, it is hoped that the authorities will now take serious measures to either end load shedding or at least reduce the duration of power outage in the year 2010.

The United States is helping Pakistan to quickly overcome energy shortages by upgrading existing generation efficiency and materializing energy projects on fast track basis. It can help in overcoming power shortages this year.

There is also a need to renegotiate rental power projects (RPPs) with the sponsors in a way that they are convinced to lower tariff, the country gets electricity on a fast track basis and sponsors also get a reasonable return on their investment.

Pakistan must augment its natural gas production by gearing up exploration activities and accelerating progress on Iran gas pipeline project so that the load shedding of gas is ended in the country. Iranian Ambassador has been recently quoted as saying the project was being delayed on Pakistani side as Iran has already brought the pipeline to its border with Pakistan. We need to act fast on this project if we want to ensure gas supplies for power generation units and lower the cost of production of local industries specially export oriented sectors.

We also need to address the issue of liquefied petroleum gas (LPG) to make it an affordable fuel for urban poor and people of remote areas.

However, for all these actions, we need a renewed vigor and spirit and wholehearted support from the top leadership of the country. Lets see how committed is this leadership towards the economy and well being of Pakistani people.

Naeem Qureshi.




Editorial For December-2009

Petrol Price Hike to Hit Common Man

Dear Readers.

The government has announced increase in petrol prices from December 1, which has come as a great blow on the general public at large as they are already suffering due to recent hike in electricity and gas charges. The increase in petroleum prices by 4 percent is a joke with the poor masses who are unable to maintain their kitchen budget due to escalating price hike. Pakistan is the only country in this region, where poverty is increasing despite government claims and funds by donors and multilateral financial institutions.

Due to the increase in oil prices, the middle and the lower middle class will ultimately suffer the most because majority of Pakistan's population uses public transport to reach their destinations and due to the price hike they will have to pay extra amount of fare which is already increased by intra city bus operators by 20 percent.

The present government takes so much credit of working for the benefit of the welfare of people, but it seems the people at the helm of affairs are quite oblivious of the people's miseries. The recent increase in petrol prices will create a lot of problems not only for the common people, but industrialists, traders, transporters will also suffer huge losses as their input cost would escalate manifold. This would certainly affect the exports of the country. The petrol price hike will have a negative impact on industrial and commercial activities.

The government has to work for the benefit of the common man instead of working against their interests. The present government and its bureaucracy, ministers, and MNAs are good for nothing and all they do is to spend lavishly by visiting foreign countries and spending luxuriously from national exchequer on foreign tours. The people have lost faith in the government and its policies.

When the present government took over after 2008 general elections, the people had a great hope that it would do something for the solution of their problems, but the government has miserably failed in winning the hearts of the people. It has forgotten its election slogan of “Roti Kapra aur Makan”.

In our view the civil society should stand up and protest against unnecessary hike in petrol prices and force the government to withdraw its “unpopular” decision. It is high time the government should take serious measures for the benefit of the people, otherwise people would further suffer

Naeem Qureshi.



Editorial For November-2009

The Gas Load Management Programme

Dear Readers.

The gas load management programme 2009/10, proposed by the sub-committee of the Economic Co-ordination Committee, envisaging a two-day weekly holiday on a rotational basis for all sectors is likely to be approved in the next meeting of the Cabinet. All the stakeholders were taken on board prior to the finalisation of the plan by the sub-committee, which accounts for the revision of the plan from the earlier version of an entire week-long gas shedding schedule for specific zones/clusters.

The industry had argued that a week was too long for factories to remain non-operational. It is important for the plan's success to ensure concurrent gas and electricity load shedding for those industries/sectors that rely on gas as a raw material, rather than as a source of energy. At the same time, the government must accept that priority in terms of gas supply must be extended to that industry, like fertilisers, where gas is used as an input rather than as a source of energy.

This would entail the most economically viable use of gas. There is no doubt that planned load shedding as opposed to unplanned load shedding, is preferable as it allows the rearranging of business processes to ensure maximum efficiency under extremely difficult circumstances. The Economic Advisory Council, constituted by the present government, presented a detailed integrated energy plan in March 2009 to the ECC. The government, instead of implementing the plan, has been engaged in fire fighting.

The ECC is now being told of shortage of around 500 to 700 mmcf per day, during the winter, whereas distribution companies' estimate is higher, ie around one billion cf per day. Obviously, the top priority for gas allocation should be power generation. Next, the gas needs of the industry have to be met in order to maintain employment and also produce an exportable surplus. Residual output be provided to commercial and domestic consumers. And, lastly, CNG use needs to be restricted to inter-city buses for mass-transit.

In the long-term, we need to import Regasified Liquid Natural Gas (RLNG) to replace liquid fuel in the power sector. Ensure connectivity and merger of SNGPL and SSGC transmission business for better distribution/allocation of gas according to requirements and need. Proper unaccounted for gas (UFG) control system should be introduced in both companies, as one percent reduction nearly equals to 40 mmcfd.

The pressure of Qadirpur field is falling. Without timely installation and commissioning of requisite compression equipment, the shortage can be compounded. In the meantime, expansion of gas distribution system due to political patronage must stop until further discoveries. Instead, the LPG/Air mix system be used wherever possible

Naeem Qureshi.




Editorial For September & October-2009

Circular Debt

Dear Readers.

Finance Minister Shaukat Tarin said that the government has cleared most of the circular debt of Pakistan Electric Power Company (PEPCO). "Only Rs 8 to Rs 10 billion of Rs 90 billion is outstanding and that too will be cleared in next few days.

He said that PEPCO should have only commercial debt and receivables on its books now and no government debt. It may be noted that the issue of circular debt was propped up when the government failed to clear its liabilities for subsidizing the prices of petroleum products and electricity tariff. The amount of circular debt had swelled to such an extent that it started adversely affecting the profitability and liquidity of large organizations in both public and private sectors.

The clearance of PEPCO's debt has somewhat enabled the power marketing arm of WAPDA to make payments to IPPs for power purchase and oil marketing companies and gas utilities against furnace oil and gas supplies for its generation companies. The payment has also improved liquidity of oil marketing companies and they are now making payments to refineries and oversea oil suppliers.

It has been reported that the government was also negotiating with Islamic banks to arrange funds for retiring the remaining amount of circular debt as soon as possible and the banks have agreed to provide the financing in this regard. However, there is a need that the government should work on a long term strategy to improve the working of PEPCO and reduce its line losses which are more than 20 percent. Besides, arranging funds for the power marketing company, the government must ensure that the circular debt should not prop up again due to inefficiency of PEPCO .

Naeem Qureshi.



Editorial For August-2009

POL Price Blow

Dear Readers.

Minister for Water and Power Raja Pervez Ashraf has recently told National Assembly that the tariff of proposed rental power plants (RPPs) was 13.5 cents per kilowatt per hour and not 18 cents as alleged by the opposition members in the Lower House.

The tariff for RPPs is just 1.5 cent higher than independent power producers (IPPs) whose tariff is 12 cent per KWh, the minister said and dispelled the impression that the government was buying electricity from RPPs at higher rates.

Justifying 1.5 cent higher tariff for RPPs, the minister also said that under the present energy scenario, this cost is negligible when compared with the huge production losses and inconvenience being faced by the public at large on account of long hour load shedding in the country.

The minister was responding to the charges of opposition members in the National Assembly that some influential persons in the country were involved in securing kickbacks and commission from RPPs deals and called it a mother of all scams. The opposition benches had claimed that existing IPPs could generate at least 1500 MW of electricity in the country if the government decides to clear the piled up current circular debt which is forcing IPPs to use their full capacity.

The idea of RPPs was floated in the last days of previous regime, when it faced strong criticism about power shortage in the country. A couple of the RPPs were initiated to fill the demand-supply gap on fast track basis. Bhikhi power plant is one of them which started supplying 136 MW to national grid by end of 2007.

In the present circumstances, it is necessary that the government should provide details of actual tariff being offered to various coming up RPPs to media so that the opposition to these power plants should be minimized to a level that sponsors of these units should not feel threatened by the rising opposition or think of giving up these projects.

To the best of our information, some of the existing RPPs are providing electricity to national grid at reasonable rates and some forthcoming units would also be offering power at rates below Rs 8 per unit to PEPCO.

However, it is the need of the hour to encourage the existing IPPS to fully utilize their generation capacity to ensure that cheaper electricity is also added to national grid to neutralize the impact of costly supply from RPPs.

The piled up circular debt has also raised a question whether the government would be able to pay the existing and fast coming up RPPs for their supplies as it had failed to clear the huge arrears of existing IPPs

Naeem Qureshi.



Editorial For July-2009

POL Price Blow

Dear Readers.

The elected government has given yet another blow to the people in its short span by increasing petrol prices for the second time by a substantial amount to dis-balance their budget.

According to OGRA notification, price of petrol has been increased by Rs 5.92 to Rs 62.13 per litre, HOBC by Rs 8.50 to Rs 78.78 per litre, light diesel by Rs 6.94 to Rs 54.94 per litre and Kerosene by Rs 7.48 to Rs 59.35 per litre. The oil companies have increased price of high speed diesel by Rs 6.94 to Rs 62.65 per litre, making diesel dearer than petrol, for the first time, in country's history.

It is feared that this mini-budget will make the life of poor more miserable and aggravate socio economic condition in the country.

This rise has prompted hue and cry among the general public as well as trade, industry and transport sectors. Everybody is perturbed and agitating, in his own way, against this anti-people move of the government which feels that it is simple to collect revenue from this easiest source.

The goods carriers and public transport owners have already raised their fares, soon after the announcement of new POL prices while other sectors of the economy are mulling to raise their prices in accordance with the increase.

The PM's Advisor on Petroleum Dr Asim Hussain has tried to justify the move by saying that it was inevitable as international crude prices have also surged and are moving upward.

Meanwhile, this move has been challenged in the Supreme Court of Pakistan by the secretary general PML (N), who had prayed the apex court to freeze OGRA notification of June 30, 3009, which enhanced petroleum prices in the country from July 1, 2009.

Whatever is the outcome of this petition, one thing is for sure that this move has created a bad feeling about the government. Political parties including Jamaat-e-Islami, have chalked out a plan to resist this increase and they will hold rallies in different parts of the country.

On the other hand, the government has decreased gas prices in the range of 2 to 4 percent, effective July 1, 2009, but barred compressed natural gas (CNG) from this price cut. It seems that the bureaucracy has deliberately tried to deprive the middle class and lower middle class from using the cheaper fuel. The government must allow the middle class office goers to have at least one cheaper fuel for their daily commuting so that they should not feel the heat of petrol price rise.

The government must review this decision, because it will certainly cause a spiral price hike in the country and put an unnecessary pressure on people who are already burden with the existing inflation

Naeem Qureshi.



Editorial For May & June-2009

Costly Gas Deal

Dear Readers.

Pakistan has signed a land mark agreement with Iran to purchase natural gas in next three years from its Paras gas field, but at higher price which in experts' opinions cannot be afforded by the cash strapped country.

PM's Advisor on Petroleum Dr Asim has said that 2,100 kilometers long 42 inches pipeline would cost $ 1.2 billion and provide 750 million cubic feet of natural gas per day and meant exclusively for power generation plants to produce 5000 megawatts of electricity.

Although the Advisor is claiming that this is not a costly deal for energy hungry nation, the experts are sensing it otherwise. It may be noted that the Federal Cabinet, in its last month meeting had accorded approval to construction of Pakistan-Iran gas pipeline, now termed as “peace pipeline” to cater to fast growing domestic requirements for natural gas.

The Cabinet was also told that imported gas would be 40 percent economical than furnace oil for power generation. Experts are convinced that the Cabinet has approved a higher price than agreed between Iran and Pakistan in July 2006.

It is important to mention here that those who had ever dealt with Iranian negotiators on price matters know that Iranians are highly unpredictable when it comes to prices. Prior to July 2006, Iran was seeking a tariff of 45 of crude price for gas supply, but the sudden rise in oil prices encouraged the oil and gas rich country to increase this ratio to 78 percent and more recently 80 percent of the crude.

According to a rough calculation, the price for 1 million cubic feet of gas (mmcf) at the present oil price of $ 60 a barrel will be about $ 8 or Rs 643, while the price of locally produced gas is estimated at $ 4.5 or Rs 364 per mmcf.

Iran had sought $ 7.20 per million British thermal units of gas in July 2006, when India was offering $ 4.20 per mmbtu. In February 2007, both India and Pakistan agreed to raise this price to $ 4.93 per mmbtu. But crude prices soared to unprecedented level and those offers became irrelevant. Then Iranian Parliament passed a resolution, barring the government from supplying gas at any price less than 80 percent of crude to any country. Pakistan government including the President Asif Ali Zardari had tried to convince Iranian leadership to lower the price, but to no avail. This compelled Pakistan to agree to this price and sign a purchase deal at 80 percent of oil parity. As stated by Dr Asim, Pakistan has no option except to go for this deal to avert upcoming energy crisis. However, it is to be noted that this deal is not final yet, because it requires a guarantee of a third country. It has also to be seen that how finances are arranged for this deal from international financial institutions.

Naeem Qureshi.



Editorial For April-2009

Petroleum Policy 2009

Dear Readers.

The Advisor to PM on Petroleum and Natural Resources Dr Asim Husain has claimed that the new Petroleum Policy 2009 is aimed at achieving maximum self-sufficiency in energy by increasing oil and gas production in shorter period.

He said that the initiative has been taken in line with government's commitment to accelerate the exploration and development program to reverse the decline in crude oil production and increase domestic gas production and supply.

The government has set a target of drilling 100 new oil and gas exploratory wells during the year 2009 to meet country's growing energy demand. So far, 728 exploratory wells have been drilled across the country, out of which a total 219 remained successful.

The oil field lease period has been extended to 30 years while the government will give a 10 percent deemed duty to refineries, placing upper cap at $ 80 and lower cap of $ 50 per barrel of crude oil in the revised formula under new policy to meet international standards.

The producer price will be $ 4.08 per mmbtu for zone I, $ 3.82 per mmbtu for zone II and $ 3.55 per mmbtu for zone III in the new policy, assuming the current crude price at $ 50 a barrel.The exploration and production companies will pay 12.5 percent royalty and 40 percent income tax to the government under the policy.

No doubt the new policy offers several lucrative incentives to woo foreign and local investors in oil and gas exploration activities, it has some causes of concerns for the domestic energy users. Though the high well-head gas prices will attract large E&P companies to return to Pakistan, this price bracket would lead to higher prices of gas in the country. This will further increase cost of production for the domestic industry which is already crying and pleading the government to reduce utility prices.

The higher gas prices will also discourage new independent power units in the country and they would seek the higher tariff to generate electricity. The local industry and domestic consumers should have the advantage of cheaper gas and oil if it is locally produced.

There is a popular opinion that gas and oil, if explored locally should be provided at lower prices so that our industry should have a competitive edge over other competitors in the neighborhood. To ensure the supply of indigenous gas to domestic users at cheaper rates, the government needs to have an energy mix. The import of gas from either Iran or Turkmenistan should be aggressively persuaded beside encouraging import of liquefied natural gas (LNG) or liquefied petroleum gas (LPG) along with the doubling of efforts to explore and produce gas to provide this mix and ensure the supply of gas at reasonable prices.

Naeem Qureshi.



Editorial For March-2009

Political Instability

Dear Readers.

The on-going power tussle between Pakistan Peoples Party (PPP) and Pakistan Muslim League (Nawaz Group) has taken a dramatic turn as the Supreme Court of Pakistan disqualified both the leaders of PML (N) from holding public office. Soon after the verdict, the co-chairman of PPP and President of Pakistan Asif Ali Zardari has promulgated a Governor Rule in Punjab for two months.

Nawaz Sharif and Shehbaz Sharif of PML (N) are alleging that President Asif Ali Zardari is behind their disqualification verdict. They also allege that Governor Rule has been imposed to change loyalties of PML (N) MPAs in Punjab and form PPP's government in country's largest province.
They have launched a mass movement against this judgment and asked the people of Punjab as well as Pakistan to come out and stand up against PPP government. Nawaz Sharif has also asked the bureaucracy and police to disobey the orders of Punjab Governor Salman Taseer.

Nawaz Sharif had already extended support to the lawyers' movement for the restoration the former chief justice of Pakistan Iftikhar Chaudhry who was sacked by the then chief of army staff and President of Pakistan Pervez Musharraf.

The leaders of these two major political parties had a history of political rivalry and personal vendetta and they had dismissed each others' governments twice in a span of less then ten years. They had also fabricated scores of cases of corruption against each other during their tenures. As a result, PPP leader Asif Ali Zardari had remained behind the bar for about ten years.

The recent tussle has caused a political turmoil in the country at a time when the nation is passing through a serious financial crisis and facing serious threats not only from its neighbours but also from religious extremist elements who have challenged the government's writ in northern areas.
The disturbances have badly affected the country's dwindling economy and it is feared that if this tussle lingers on, the country might face a financial collapse. This is very unfortunate that political leaders of this country have not learned any lesson from the past and repeating the same mistakes which resulted in the sacking of their governments.

The democracy teaches a lesson of tolerance, morality and public service and not the hatred and vengeance. There is a need that our leaders must show the political maturity and prefer national interest over personal interests.

Our political leaders must learn lesson from the oppositions and the governments in developed countries and serve the people instead of creating problems for them.

Naeem Qureshi.



Editorial For February-2009

Alarming Inter Corporate Debt

Dear Readers.

The total inter-corporate debt in country's energy sector has alarmingly swelled to more than Rs 428 billion and it is feared that it might cause a total shut down of thermal power generation in the country if not serviced in near future, specially when power demand will touch a new peak in the coming summer. Yet it seems that our economic managers are least bothered and not paying serious attention towards the solution of this problem on priority basis.

A senior official of Pakistan Electric Power Company (PEPCO) has told reporters that the company's arrears against power distribution companies had surged to Rs 269 billion while it had to pay Rs 159 to IPPs and fuel suppliers.

He said the piled up inter-corporate debt has not only contributed to the energy crisis in the country but it could make the situation more complex if it was not addressed on immediate basis.
It may be pointed out that the Energy Update, in its last couple of issues, had pointed out and suggested the government to accord top priority to this issue and arrange payments to prevent any chain reaction.

However, due to other pressing engagements and political maneuvering, the government is not paying serious attention to the issue and letting it grow into a bigger problem.
According to reports, various IPPs have either shut down their plants or planning to close them till the receivables are cleared from PEPCO. Similarly, fuel suppliers are also threatening their buyers to stop supply of furnace oil if they further delayed payment against arrears.
In this entire situation, its seems that PEPCO, being the public sector power supplier is caught up in a fix as it cannot suspend power supply to WAPDA's distribution companies and KESC for more than one day due to public pressure.

The PEPCO can arrange supply from WAPDA's own power generation resources, but it cannot force IPPs, for long, to continue power generation and supply electricity in the present scenario. The reason is obvious. IPPs cannot generate power without the uninterrupted and ensured fuel supply i.e., furnace oil from OMCs and gas from utility companies.

According to recent estimates, circular debt of PSO, the largest fuel supplier to IPPs and WAPDA has already crossed Rs 80 billion. Similarly, PSO was not properly servicing payments to oil refineries against the purchase of fuel.

The consumption of furnace oil is ranging between 30,000 to 50,000 metric tons per day by the power generation units in the country, which means the country needs at least one tanker of fuel a day. The calculated cost of one tanker at an average prevailing price is approximately Rs 1.5 billion, which means the country needs Rs 547.5 billion for one year to keep load shedding away.

With the rising budget deficit and the present conditionalities of IMF, it is not possible for a country with such a bad economy to afford this huge cost, specially when the fuel price has to be paid in foreign currency? Then who will ensure the uninterrupted fuel supply to IPPs and WAPDA to produce the required electricity for the distribution companies if they do not pay to PEPCO which in turn pays to IPPs and fuel suppliers who then pay to foreign fuel supplying companies and refineries respectively to complete the payment cycle.

Naeem Qureshi.



Editorial For Dec-2008 & Jan-2009

Thinning Price Gap To Wreck CNG Sector

Dear Readers.

The government, in its continued spirit of passing on the burden of price hike to consumers, has rewarded the nation with a new year's gift – 8 % rise in overall gas tariff and a 10 percent rise in CNG prices effective from 1st January 2009.

Industry people call it a big blow and feel that this rise can serve as the last nail in the coffin of CNG industry which has witnessed an unprecedented growth in the last eight years with a conversion of more than 1.8 million vehicles to compressed natural gas (CNG) in Pakistan. Even, international CNG filling stations and kit makers are astonished to see such a fast growth of CNG sector in Pakistan and, that too, in a short span.

However, the people in local CNG industry are worried about its future in the wake of fast thinning gap of prices of CNG and petrol. They fear of large scale closure of CNG stations in the country and a loss of investment in billions of rupees if petrol prices fall further and gas prices continue to rise.

They feel that the car owners will not convert their vehicles to CNG anymore if oil prices continue to fall and come close to petrol prices, because this environment-friendly fuel will no longer remain an economical option for them. This will stall growth in this sector and deprive the country from environment-friendly fuel.

Currently, petrol price is fixed at Rs 57.85 a litre while CNG is sold at Rs 44.50 a kilo, having a price difference of only Rs 13.50. With this increase in CNG prices, the price difference will be further reduced thus frustrating all the feasibilities for new CNG stations and automobile conversions.

CNG filling station owners claim that an investment of Rs 150 billion has been made in this sector on the government assurance that a 50 percent price difference will be maintained between petrol and CNG for a long time.

The previous government, in its CNG policy had assured the investors that CNG price will be cheaper than petrol by 50 percent and that a sufficient gas supply to CNG filling stations will be ensured so that this cheaper fuel is available to the motorists in the country round the clock.
The CNG filling station owners are strongly urging the government to reduce gas prices to save CNG industry as gas prices are linked to the oil prices and they should come down when oil prices are kept falling.

They maintain that gas prices were increased twice on the pretext that international oil prices were skyrocketing. However, when they have fallen to below $ 40 a barrel, gas prices should also be lowered in proportion to present oil price fall.

Malik Khuda Baksh, Chairman CNG Station Owners Association (CSOAP) is of the view that the government should cut gas prices according to the formula it applied during the oil boom.
He said that CNG dealers were already over burdened with sales tax, franchise fee, withholding tax and other expenses whereas the rapid increase in power tariffs has added to their woes. The increase in gas prices will ruin their business and they will have no option except to close down their filling stations and go to other business.

Naeem Qureshi.




Editorial For November, 2008

Large Cabinet

Dear Readers.

The induction of 40 ministers and state ministers in the federal cabinet has caused a concern among the members of civil society of Pakistan who feel that it was a waste of hard earned money of taxpayers.

They believe that it was not fair to favour party men, as reward for their loyalty and hard work, and bribe coalition partners at the expense of tax payers' money. They also wonder as to how a country which is begging for loans from international donors to meet its immediate foreign obligations, can afford to bear unnecessary burden of a large cabinet of nonprofessional people.

With this induction, the federal cabinet will be swelled to 55. The presence of advisors and special assistants to Prime Minister is in addition to this figure. Moreover, there are reports that more ministers and state ministers will be inducted soon in the cabinet.

The Prime Minister Yousuf Raza Gilani has already indicated during a recent press conference that cabinet will be further expanded with the induction of new ministers and junior ministers from coalition partners including MQM in near future to effectively respond to public grievances.

The Prime Minister and federal Information Minister has also defended expansion in the cabinet saying that it will not burden the economy and instead will help the government to respond to the questions in the Parliament.

It is pertinent to mention here that the National Commission on Government Reforms had recommendations the government to bring down the number of ministries from 41 to 23 through mergers to avoid overlapping and improve their efficiency.

There are also suggestions that some of the ministries should be abandoned at federal level as they are provincial subjects. For instance, education and health, population and labour are provincial subjects and there is no need to have their ministries at federal level.

As Pakistan was negotiating a $ 10 billion Stand-By Arrangement (SBA) with International Monetary Fund (IMF), it is all the more important for the government to have a smaller cabinet.

The government must understand that IMF will certainly raise objections to the expansion of the cabinet as one of its conditionalities includes a sizeable cut in government expanses

Naeem Qureshi.



Editorial For October, 2008

Economy Gets Lowest Priority

Dear Readers.

Despite claims of the present government of according top priority to improve country's economy, the situation is deteriorating with every passing day. It seems that the government is no more interested in the economy and, in fact, busy in addressing political issues and other less important matters which give more publicity to ministers and top slot.

The international watch dogs of the global economies are perturbed over the deteriorating economic situation in Pakistan. US credit rating agency Standard & Poor's has very recently downgraded Pakistan's long term and short term credit rating from B (single B) to CCC+ (triple C plus) with a negative outlook. This denotes doubts over Pakistan's ability to meet $ 3 billion in debt servicing costs due early next year.

S&P further said in a report that rating may be lowered further if Pakistan government fails to stop the growing external imbalances.

According to a recent report, Pakistan has become the world's riskiest government borrower as the nation is running short of money to repay state debt. Pakistan's foreign-exchange reserves have dropped 67 percent in just one year to about $4.7 billion.

The capital market has recorded a significant outflow in the last one year as KSE 100-Index has lost more than a third of its value and the rupee has fallen 27 percent to 79 a dollar. The balance of payment deficit has increased six-fold in the first two months to $2.5 billion and the current account deficit reached 1.6 percent.

Everybody in the country is nervous about country's falling economy but the authorities seem to be relaxed. This is very unfortunate that the economy is getting the lowest priority.

Business community is urging the government to pay attention to the economy and convene a meeting of all stakeholders to discuss how to stop this steep fall and how to revive the economy.
It is important to mention here that a significant time has already been lost and there is an urgent need to address the economy on immediate basis to save it from further collapse.

The government has to stablise falling ruppee, rescue capital market from collapse as it is the indicator of the economic health of Pakistan. Similarly, cost of doing business has to be lowered by cutting interest rates and enhancing power generation to boost industrial and agricultural output.
The government needs to arrange, on immediate basis, a sufficient foreign funding to meet immediate debt servicing needs.

Naeem Qureshi.



Editorial For September, 2008

Dear Readers.

Despite the stay granted by the Islamabad High Court against the move of National Electric Power Regulatory Authority (NEPRA) to increase power tariff in NWFP, on a plea of the provincial government.

The single bench comprising Chief Justice Sardar Mohammad Aslam had issued notices to the NEPRA and the Peshawar Electric Supply Company (PESCO) to apprise the court
of the details in the next hearing on September 24..

It is interesting to note that the NEPRA had recommended a 60 percent rise in power rates, but the government decided to implement half of the increase this time and rest in September 2009.
It is worth mentioning that the government had already imposed a 16 percent GST on power bills, making a total impact of 46 percent on end users.

In July, the government had also raised power tariff by 15 percent in an effort to withdraw subsidies and pass on the impact of oil price rise.

Though the general public did not react to tariff rise, the business community has strongly opposed that move across Pakistan and initiated efforts to build up a pressure on the government to withdraw its decision.

Taking lead, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has vehemently reacted on government decision and its president Tanvir A. Sheikh said the increase will ultimately escalate the cost of production of the industrial sector.

He noted that the decision will have a negative impact on the overall economy in general and textile and cement sectors in particular, as electricity accounts for a substantial cost of these sectors.
Leading chambers of commerce and industry including Karachi, Lahore, Faisalabad, Islamabad have also joined FPCCI in the protest against the tariff rise, because they feel that this increase would also render country's dwindling exports as uncompetitive in the international market.

They believe that this decision has been taken on the recommendation of World Bank and other multilateral donors who link their financial support to various conditionalities which are detrimental to developing economies.

Industrial sector, especially the large scale manufacturing sector is the largest consumer of electricity, using more than 40% of the total power generation in Pakistan. The increase in energy prices means a rise in their cost of production which tends to add to the overall price level in the country.
At a time, when prices are already very high in the country and gone beyond the reach of common man, a hefty increase in power tariff would mean a severe blow to the people and the last nail in the coffin of sluggish economy.

Naeem Qureshi.




Editorial For August, 2008

Dear Readers.

With the recent rise in POL prices, the purchase of petrol and diesel has gone beyond the reach of a common man. Nobody had ever thought of buying petrol at Rs 86.66 a litre and diesel at Rs 58.54 per litre. This rise did not only anger transport sector to observe strike, but forced people to start agitations in various cities and go for shutter downs.

Whether transporters, businessmen, government employee or common man, everybody is strongly opposing this increase, because this has fuelled already high inflation in the country as well as enhanced the cost of production.

It is important to mention here that economists are claiming that the government can easily offset the impact of high crude oil prices by lowering or completely eliminating taxes and petroleum development surcharge on POL products which is about 50 percent of the total price.

For a long time now, oil cartel OPEC is advising oil consuming countries to remove taxes to cut down prices of motor gasoline, diesel and furnace oil instead of asking oil producing countries to slash crude prices.

The OPEC suggestion has gained popularity among consumer protection groups in oil consuming countries and they are pressing their governments to slash levies and taxes on crude oil to reduce POL prices.

Here it is interesting to note that levies and taxes from crude oil import and its sale is significant and this is the reason why these governments do not want to easily give away this lucrative source of revenue.

However, it seems that time has come for oil consuming governments to gradually remove these taxes and levies so that the price of petroleum products should come down in their countries to nearly half of the existing level.

It is high time that the government should seriously consider withdrawing taxes and levies on POL prices and pass on this impact to the consumers. This will not only have a positive impact on the overall price level in the country, but also reduce cost of doing business by lowering power rates to producers of exports and consumer products.

Naeem Qureshi.



Editorial For June, 2008

Dear Readers.

Karachi city is facing multiple problems during this summer. On the one hand, unscheduled and prolonged load shedding is going on in the sizzling summer and on the other traffic management is becoming worst due to excavation of many important roads in the name of development and failure of traffic police. Commuters have to stuck-up for hours on roads because of slow movement or complete traffic jam.

All is going amid widespread protests by the people particularly against prolonged load shedding. Presently the city is phasing power shortage of 3MW in the morning and 500MW in the evening because of technical faults in unit 4 and Unit 5. The privatized Karachi Electric Supply Corporation (KESC) is facing all the wreath of the public as a number of offices and vehicles have been attacked and burnt by the mobs in different areas of the city. WAPDA claimed that it is providing over 700MW power from its network. While chairman WAPDA told in an interview that if KESC pay dues we will provide 600MW to it.

There is a lot of criticism on KESC management, but it is also a fact that due to previous government's policies, the KESC has not been able to increase its generation capacity in the past. The government had allowed only private sector companies to generate electricity.

However, the situation has changed after its privatization in November 2005 and now there is no bar on KESC to enhance its power generation capacity. But it seems that the new management is reluctant to inject more funds in the company for the reason known to top brass. At the time of privatization, the buyer had pledged to invest US $ 500 million in KESC over a period of three years, in the first phase US $ 75 million. About one and a half year has passed but no investment was done in the company that has further aggravated the situation.

Moreover, there is also a tussle between Siemens and KESC which has not been resolved and the ultimate sufferers are the citizens of Karachi. The industrial and commercial activities of the city have badly affected due to longer-duration of load shedding affecting as well as exports of the country.

This situation demands an immediate action of the government to take serious measures to solve the power problem of mega city because the government is still holding 25.65 percent shares of the company and has recently appointed Chief Executive Officer, a retire General.

Like power problem, the traffic mess is becoming from worse to worst because in to absence of a mass transit system, the commuters are suffering financially and physically in the hands of transporters. The City District Government of Karachi has initiated a number of road development projects, which have caused traffic hindrance in many busy areas particularly during office hours, which causes slow movement of vehicles on city's roads that has also increasing the pollution in the city, which is already alarmingly high in various areas of the city.

The main cause of pollution is because of unchecked smoke emission by faulty buses, min-buses and auto rickshaws. No concrete efforts are being made to replace these environmentally dangerous vehicles. The government is claiming since long to bring CNG buses and rickshaws, besides to start checking campaign.

The promise to introduce hundreds of CNG buses on city road is yet to be fulfilled, where as the condition of existing passenger buses is deplorable. Some CNG buses were plying on the roads four years ago that have disappeared from the city. There are reports that most of them have been shifted to other cities or snuggled to neighboring countries. In short the government must take immediate action against traffic police, not doing their duties honestly, strict checking of vehicles and last but not least over come the shortage of electricity.

Naeem Qureshi.



Editorial For May, 2008

Oil Price Blow A Dilemma

Dear Readers.

Despite pre-election promises to bring down prices of essential commodities including atta (flour) and petroleum products, the coalition government, has instead, increased prices of petroleum products twice during its four-month tenure while atta prices escalated automatically. There are reports that petroleum prices will be further raised before the announcement of national budget, due in June this year.

The government is also claiming that it will pay over 150 billion rupees in subsidies on petroleum products to offset the impact of skyrocketing crude prices in the international market. Crude again crosses $ 126 a barrel in the international market.

As Pakistan enhanced prices of petroleum products, the neighbouring India, on the contrary, had reportedly reduced them. What's the matter? Should we assume that India was getting crude at cheaper rates than Pakistan or India had recently made discovery of large oil reserves so that it does not need to depend on imported crude. If both assumptions are wrong than we have to believe that Indian government has sacrificed on some portion of taxes and levies from petroleum products.

Oil marketing companies and the experts had been suggesting the successive governments to reduce development surcharge and other levies on petroleum products to reduce the impact of rising international crude price.

OPEC, an organization of oil producing countries is also asking governments across the globe to cut taxes on petroleum products as this is the only way to save the common man from this shocked.

Economists believe that increase in oil prices has a multiple effect on the prices of other products as it raises the cost of production and renders less developed and developing countries uncompetitive in the international market.

Pakistan being one of the developing countries is facing the similar situation. Cost of production has been enhanced manifold in Pakistan in the last five years because of rising oil prices, seriously affecting export competitiveness among the countries of the region.
Our exports are falling after touching peak between 2004 and 2006, mainly due to high electricity, gas charges and bank's mark up.

There is a need that the new government should reduce the rate of levies and taxes on petroleum products to bring down the overall cost of production and boost country's exports. This is also the demand of business community and the common citizen. The government can make revenue from other unexplored sectors like tax on agriculture income or taxing luxury items.

At the same time, government should focus on exploiting other sources of energy to reduce dependence on imported oil. Time has come to use vast coal deposits in Thar and other parts of Pakistan to produce electricity and also meet industrial needs.
The early agreement on gas import from Iran or Turkmenistan can also help in reducing dependence on oil import.

Alternate energy is another mode to generate cheaper electricity.

Naeem Qureshi.





Editorial For April, 2008

Can he do it ?

Dear Readers.

Prime Minister Yousuf Raza Gilani has promised the nation to take up a an ambitious task of combating terrorism, enhancing power generation, employment creation, cutting government's expenses and price control and other issues under a 100-day plan.
Although, he has shown a firm commitment to his agenda, the analysts and people from a cross section of the society are somewhat feeling uneasy regarding its implementation specially in the wake of a long list of items.
There is no doubt that the agenda reflects the true inspirations of the people as every Pakistani needs uninterrupted power supply, cut in prices and availability of essential consumer items, jobs, safety of their lives and property and shelter at a low cost in the country.
As announced by him, there is an urgent need that the government should work on war footing to initiate power generation projects in the public sector as long as the private sector was not forthcoming in a big way due to various reasons.
As mentioned by him, Pakistan was presently facing a shortage of 3,000 megawatts and this will be enhanced to 4,000 MW next year, it is all the more important to take up faster pace power generation projects of alternative energy.
Similarly, being a victim of international terrorism Pakistan needs to adopt a comprehensive strategy to combat this menace which has claimed hundreds of precious lives of innocent people including PPP chairperson Mohtarama Benazir Bhutto.
It is high time that the militants must accept the offer of Prime Minister and lay down their arms and start negotiations to make this country a peaceful and safe place for our children and also to boost economic activity was sluggish due to suicide bombing.
There is an urgent need to immediately initiate small and medium sized water reservoirs on small rivers wherever possible, in addition to large dams, to store rain water which would otherwise lost to the sea.
Gilani also needs to check prices of all daily-use essential items by enhancing their production in the country or importing from cheaper sources.
His government needs to keep watch on the movement of prices in the country as the profiteers have raised prices of essential items without any reason. There prices can come down on immediate basis, if the producers and sellers are warned and questioned about the reasons behind unilateral price hike.
The government needs to remove sales tax from all the food items including vegetable oil and ghee, sugar, packed milk and packed food, etc with immediate effect to lower their prices. Nowhere in the world, food items are subjected to the sales tax.
The decision to construct new one million housing units every year will help in reducing the price of flats and houses which have gone beyond the purchasing capacity of the middle class.

Naeem Qureshi.



Editorial For March, 2008

Karachiittes Suffer of KESC's

Dear Readers.

On March 6, 2008, Karachi experienced an unprecedented power breakdown following the disconnection of electric supply from PEPCO, a power supply company of WAPDA due to non-payment of huge arrears against KESC.

This is not the first time, that Karachi Electric Supply Corporation (KESC) has faced such a situation. The utility company had defaulted several times on payments to fuel supply entities including PSO and SSGC in the past.

The discontinuation of fuel supply had not affected KESC's distribution of electricity in the past as WAPDA used to make up the shortage at the time of needs.

This time, the discontinuation of power supply from WAPDA's power selling company resulted in a total break down of KESC's supply network – a situation never experienced by the Karachiittes. This breakdown also exposed the weakness of KESC's distribution system which totally collapsed due to power cut of only 100 megawatts from PEPCO.

It is pertinent to mention here that PEPCO had signaled a dis-connection warning to KESC couple of days ago on account of piled up arrears, but the utility company did not pay any heed.

As alleged by the PEPCO chief, KESC did not even respond to the reminders of WAPDA's power supply company regarding payments.

As PEPCO is claiming to have an arrear of Rs 34.8 billion against KESC, the chief of power utility in Karachi said the outstanding amount was only Rs 13.7 billion.

KESC, which has accumulated huge losses on account of inefficiencies in power generation and weak management, on the one hand, has also failed to recover long standing arrears of over Rs 15 billion from government departments, on the other.

Whatever, the factual position is on the payment front, the people of Karachi and industrial and commercial concerns are very much worried about the power supply situation in the city. They are also concerned about the power shortage during the forthcoming summer in this largest industrial and commercial hub of the country which provides more 70 percent of total revenue.

They demand immediate attention of the government towards this vital issue and seek the personal intervention of President Pervez Musharraf to resolve the dispute between the two utility companies which has disturbed the overall power supply situation in the metropolis. They also seek assurances that PEPCO should continue to supply power to KESC so that its consumers should not face any hardship during the forthcoming sizzling summer.

Naeem Qureshi.


Editorial For Febuary, 2008

Energy Crisis Role of New Government

Dear Readers.

Pakistan is passing through the worst ever power crisis of its history because of the imprudent policies of previous governments. Commissioning of Hub Power Company in private sector was the last of major power projects in the country. Since then the controversies of tariff continued to haunt all the successive governments including the government of President Pervez Musharraf and as a result no large power project came on ground in the past 12 years.

The caretakers are now trying to take some immediate steps to overcome the present power shortage, but they cannot take long-term decisions on power projects as their real task is to hold free, fair and transparent elections.

The electricity powers the engine of the economy. Besides, it illuminates cities, towns and villages as well as powers home appliances all over the world.

Keeping in view the gravity of the present situation and rising demand for power, it is hoped that this should be the top most priority of the new government to take immediate measures to add at least 3000 to 4000 megawatts to the national grid through a mid-term plan and then double the generation capacity by utilizing a mix of hydel, coal and alternate energy projects to cater to the demand in next ten years.

It is for the benefit of new policy makers that Private Power Infrastructure Board (PPIB) already had the details of nearly 50 power projects for 12,000 MW in hand. PPIB had also issued letters of interest (LOIs) to 28 power generation projects for producing 7,630 MW at a cost of $ 7.34 billion. Similarly, the Board had issued LOIs to 9 hydel projects for generating more than 2000 MW by 2009-10, besides involving negotiations with sponsors for two 1000-1200 MW imported coal-based power plants.

Since oil prices are getting out of reach, the new government needs to rigorously pursue small and medium sized hydel and coal projects on immediate basis to get more than 3000 MW in next two to three years. They are also required to proceed with Bhasha Dam and Mangla raising project.

The future policy planners need to reconstitute the National Electric Power Regulatory Authority (NEPRA) for getting quicker and pragmatic tariff rates and procedures for coal, solar, wind and gas fired power projects.

The new government should also be focussing on Iran-Pakistan gas pipeline to get 1.3 billion cubic feet of gas as soon as possible to meet the growing demand for natural gas by domestic, industrial and transport sectors as well as the upcoming power projects in the country specially in the wake of the depleting natural gas reserves in the country.

Naeem Qureshi.



Editorial For January, 2008

Energy Crisis Calls For A Sincere And Bold Effort

Dear Readers.

At last, the top bosses in Pakistan finally paid attention to the worst ever energy and flour (atta) crisis in country's history which has overshadowed all its economic achievements.

According to news reports, President Musharraf has taken a serious notice of unprecedented energy shortage and flour prices in the country while Caretaker Prime Minister Mohammedmian Soomro had chaired two high level meetings in a span of just one week, in a bid to resolve these issues.

While the atta crisis will be solved with the increased supply of wheat to flour mills and action against the hoarders, the energy crisis seems to be persisting for long - at least till such time the WAPDA comes up with new power generation capacity and private sector commissions its under-progress power units.

As power shortage had recently touched a peak at 3,600 megawatts per day on account of government's failure to add a single megawatt to national grid during the last nine years, the people endured the worst ever eight-hourly power outage across the country.

Not only thermal power generation dipped to lowest ever 2100 MW due to oil-supply disruption during the recent widespread disturbance following the assassination of Benazir Bhutto, the hydel power generation also nose dived to a record 1300 MW on water release cut from dams.

With no large power generation project is in sight, the government has sought the support of rental power units to cater to demand for electricity as a short term strategy.

However, this approach has also failed to deliver desired results as rental power units can only generates 250 to 260 MW against the yawning power deficit.

A prudent strategy to get desired results is to keep pushing for thermal power projects on fast track basis by both WAPDA and IPPs on the one hand while pursuing big hydel power projects with a capacity of at least 2000 to 3000 MW per day.

At the same time, government should also encourage coal-fired power projects and alternate energy by announcing tariff rates which are attractive for private sector.

The government has called for conservation measures to save energy in the country, but this cannot work unless people are motivated through incentives.

Meanwhile, the government should also replace slow moving, inapt and corrupt officials with bold and dashing professionals who can market and attract investment in power generation.


Naeem Qureshi.



Editorial For December, 2007

Dear Readers.

Oil and Gas Regulatory Authority (OGRA) has recommended increase in the prices of petroleum products from December 15 fortnights, besides allowing Sui Northern Gas Pipeline Limited (SNGPL) to make interim increase in gas price of Rs 13.77 per mmbtu from January 1, 2008.

Although all these recommendations needed the government's nod though approval from Economic Coordination Committee of the Cabinet and then formal approval of the cabinet, the increase in two energy heads would certainly add to miseries of both the domestic and industrial consumers.

The domestic consumers are already facing hardships due to growing price hike of essential items, where as the industrial consumers are crying for increased production costs, making exports of Pakistan uncompetitive in the international markets.

Owing to increase in international oil prices, OGRA has recommended High Speed Diesel (HSD) price increase at Rs 1.98 per liter, MS at Rs 1.68 per liter, Kerosene Oil (SKO) at Rs 4.01 per liter, HOBC at Rs 6.63 per liter and Light Diesel Oil (LDO) at Rs 3 per liter.

This increase was expected for quite long period as the government is facing both internal and external pressures to pass the burden on the consumers. However, due to political reason, the government has withheld the decision, which increases its liabilities. Although it was expected that the caretaker government would take this tough decision, the cabinet led by caretaker Prime Minister Mohammadmian Soomro in its first meeting postponed the decision.

The previous government of Prime Minister Shaukat Aziz had also deferred the increase in fear of public outcry ahead of elections. The oil prices in the world market are hovering around $90. The government has kept the prices of diesel and kerosene oil at lower side as these two essential items are affecting common people.

It may be recalled that Shaukat Aziz government last fixed the prices on January 16, 2007 by reducing the prices of petrol (motor spirit) from Rs 57.70 per liter to Rs 53.70 per liter. Since then, no change has been made in the prices of petroleum products.

The government is already well aware of the fact that a continuous freeze on oil prices despite hike in the international market is costing it an additional Rs 101 billion during the current financial year, the government is still undecided in making the decision. But any increase in petroleum prices would directly hit every sectors of the economy, which may further trigger the price hike and increase in transport cost for common people.

The increase in gas prices has been opposed by the industries particularly cement and fertilizer manufacturers that are consuming natural gas in larger quantities.

Both oil and gas directly hit the common man, who is already suppressed under the burden of price hike. The government needs to take measures to provide relief to common man by reducing taxes on petroleum prices to absorb the increase in oil price in the world market.


Naeem Qureshi.



Editorial For Oct & Nov, 2007

Dear Readers.

Pakistan is blessed with natural gas and its use is increasing. Although its use for domestic and industrial purpose is not new, its consumption in vehicles is quite a recent phenomenon. The use of Compressed Natural Gas (CNG) in vehicles started in late 1990 at a limited scale in Islamabad and Rawalpindi areas, which gradually expanded in other parts of the country because of its cost-effectiveness and environmental friendly nature.

Now the situation is that Pakistan has become the world's second largest Natural Gas Vehicle (NGV) user country in the world, besides number one in Asia. But its unprecedented growth has posed challenges as well because the country's gas reserves are not likely to meet the growing demand. According to some estimates, Pakistan may face gas shortage after 2010. The government has initiated a number of measures to meet that shortage by gearing up exploration activities in the country and finding other alternatives like importing gas from Iran or Turkmenistan. Although the Iran-Pakistan-India (IPI) pipeline project faces snags, Pakistan is hopeful to achieve some break through in this even India did not participate.

It is a matter of fact that the Natural Gas Vehicle (NGV) industry has flourished across the country and almost 50 per cent of new vehicles are coming with factory fitted CNG kits. Besides that about 7000-8000 conversions of vehicles to CNG are reported every month. More than 1.55 million NGVs are presently on the country's road. The number of CNG filling stations is also gradually increasing in the country with growth in its demand. In the new Urban Transport Policy, the government had encouraged import of CNG buses. Financial incentives are being offered to operators of CNG buses and efforts are being made to increase the number of filling stations for CNG buses.

Karachi, which is the worst victim of environmental pollution, is the main candidate for CNG buses. Being the largest city of the country and hub of economic activities of the country, Karachi has been facing air pollution because of decade-old diesel buses. The City District Government of Karachi plans to introduce 8,000 CNG buses for its commuters. Besides buses, CNG four-stroke rickshaws are also being introduced in Karachi, which would certainly help reduce environmental pollution in this mega city. Lahore has already introduced CNG rickshaws, which has helped reduce noise and air pollution.

Despite all such overwhelming development in the CNG sector of Pakistan, the safety and regulations issues are a big challenge. Some unscrupulous elements are using unfit cylinders and faulty CNG kits in the vehicles, which are causing deadly incidents. Similarly the staff of CNG filling stations is not properly trained, which sometimes cause accidents at the stations. The role of regulators in this regard is very important. The regulatory authority, i.e. OGRA should make stringent rules and implement them in letter and spirit to improve the situation.

The role of Hydro-carbon Development Institute of Pakistan (HDIP) as a research and development organization is quite laudable, which has made efforts for promotion of CNG in the country. It is also extending support in training the staff and testing the equipment at the CNG filling stations. This role should be further enhanced by increasing the number of HDIP centers in all over the country.


Naeem Qureshi.


Editorial For September, 2007

Dear Readers.

Petrol pumps across the country observed a partial strike on August 31 to register their protest against reduction in their commissions by the government. Although they had to call off or what they termed “postpone” the strike next day, the people in most parts of country including major cities suffered a lot on that one day due to closure of most of petrol stations. The public transport and goods movement was also affected in Karachi, Lahore and Islamabad, thus the businesses suffered losses worth millions of rupees. The Oil Market Companies (OMCs), whose margins have also been reduced, did not take part in the strike, despite the fact they are complaining declining in their profits due to introduction of new pricing formula.

The government had earlier announced reduction in profit margins of both OMCs and dealers' commission through a change in pricing mechanism. The dealers' commission has been reduced from Rs. 1.74 per liter to Rs. 1.35 per liter. This change is commission caused a concern to the dealers, even though they have been earning windfall profits since year 2000 when the government had made changes in prices under the deregulation policy.

The margin of Oil Marketing Companies (OMC) has also been reduced from Rs 1.52 per liter to Rs. 1.18 per liter in the latest changes, but these companies preferred to keep them aside from the strike politics.

It may be recalled that the government had earlier allowed an increase in the oil companies' margin and the dealers' commission from a fixed 22-55 paisa per liter to 3.5 per cent and four per cent respectively on the final sale price. At that time the dealers were very happy and this also encouraged many domestic and international investors to invest heavily in oil sector. The investment was made in setting up beautiful petrol stations and their face lifting instead of investing on increasing storage capacity.

Besides allowing to earn windfall profits, the government had given the powers of price fixation on fortnightly basis to the Oil Companies Advisory Committee (OCAC). This action of the government also came under fire by the opposition and general public. Due to sever criticism, the government ultimately withdrew those powers and now fixes prices by itself.

The heavy earnings to OMCs, dealers and government at the cost of consumers had generated an uproar in the parliament and hue and cry in the media across the country early last year. This was followed by three identical constitutional petitions in the Supreme Court against the petroleum scam. These petitions filed by Maulvi Iqbal Haider, PPP's Senator Rukhsana Zuberi and PML-N Secretary-General Zafar Iqbal Jhagra are still under hearing of the apex court, where the government has faced a tough time to justify heavy duties on petroleum prices. Even the former Attorney General Makhdoom Ali Khan had to show his inability to defend the government's stance. The petitioners complain in delay due to delaying tactics on part of the government.

The government has also justified the heavily taxed rates by stating that it had accumulated a liability of Rs46.4 billion in subsidies to OMCs between May 2004 and June 2007 for keeping the prices of diesel and kerosene oil at ‘tolerable levels' against an equal amount through petroleum development levy collected during the same period.

This time the government has also increased Petroleum Development Levy (PDL) on motor gasoline by 7.5% to Rs 10.52 per liter from Rs 9.79 per liter. No PDL is imposed on high diesel and kerosene, which are subsidized by the government. The government says it has only excluded the PDL from the margin calculations.

The consumers have not been benefited from the recent steps of the government as no change has been made in the retail price of petroleum products. Consumers still pay on account of: ex-refinery/import price, excise tax, PDL, transportation cost for OMCs, distribution margin for OMCs, dealers' margin and general sales tax. All those levies have made the petroleum prices quite high and almost affordable to poors. The government should take serious steps to reduce such heavy taxes to provide a relief to the common citizens.

Naeem Qureshi.

Editorial For July August, 2007

Dear Readers.


The government on July 19 announced the new Petroleum Policy, which intends to increase the production of petroleum in Pakistan that is about 70,000 barrels per day. But it is a matter of fact that indigenous petroleum production fulfills only 20 percent of the total requirement of the country. This has caused worry among the policy makers, who suggest increase in domestic production by attracting foreign petroleum companies to invest in this sector.

The policy has also suggested various measures to attract foreign investment in the oil and exploration, which is already low. The government has introduced a system to bring quality and experienced companies in petroleum sector aimed at enhancing the domestic production.

Presently Pakistan spends a huge sum of foreign exchange on import of petroleum products because of increasing demand of energy in the country. Besides petroleum products, the demand for natural gas is also increasing. Many industries are switching over from the furnace oil to the natural gas where as vehicular gas demand is also increasing with increasing number of cars on road.

But the demotic production of gas is not quite adequate to fulfill its soaring demand. For this purpose, the government is seriously working on Iran-Pakistan-India (IPI) pipeline, which is facing snags due to political and other technical reasons. Although all the countries express their keenness, the situation is moving towards its ultimate conclusion.

It is an encouraging situation that the gas production in the country has been doubled during the last six years at 4 billion cubic feet per day. But the demand is growing fast and very soon the indigenous resources would not be sufficient to meet the entire demand.

In the new policy the government has lifted the cap of $36 per barrel (bbl) on wellhead gas price and offered a 100 percent international crude price to domestic production of crude oil, natural gas, and condensate and liquefied petroleum gas in a bid to attract quality investors in oil and gas exploration and production activities. However, the reference gas production price has been fixed at $45 per barrel.

This step has received a wide spread criticism from the oil experts and independent economists, who fear that removal of $36 dollars limit may push the gas prices up for different categories by 10 to 25 percent, and the major sufferers would certainly be the commercial consumers.

Pakistan already offers 2 to 3 dollars/MMCFD gas price, which is three times higher than the world and now it was being felt at the policy making levels that low prices could discourage investment for Pakistan's oil and gas sector.

The government has also announced to increase the gas production prices by 6-8 percent on new discoveries. However, the petroleum industry is not happy on this increase because they say after 4-5 years when the production of the new discoveries would start this raise would not be so attractive particularly for the new entrants. They fear that with the proposed increase in gas production prices, the government would again fail to attract investment in exploration and production activities.

In the policy, the government has allowed the operators who are in the initial stage and have not started production, to shift from old policy to new policy, but the interest of the consumers will be protected at all cost. The investors have also been allowed to lay pipes up to 25 kilometers from the oil or gas field.

Despite the fact the new Petroleum Policy has received a mixed reaction, the government is optimistic that this policy would be more attractive then the previous ones.

Naeem Qureshi.

Editorial For June, 2007

Dear Readers.

Karachi city is facing multiple problems during this summer. On the one hand, unscheduled and prolonged load shedding is going on in the sizzling summer and on the other traffic management is becoming worst due to excavation of many important roads in the name of development and failure of traffic police. Commuters have to stuck-up for hours on roads because of slow movement or complete traffic jam.

All is going amid widespread protests by the people particularly against prolonged load shedding. Presently the city is phasing power shortage of 3MW in the morning and 500MW in the evening because of technical faults in unit 4 and Unit 5. The privatized Karachi Electric Supply Corporation (KESC) is facing all the wreath of the public as a number of offices and vehicles have been attacked and burnt by the mobs in different areas of the city. WAPDA claimed that it is providing over 700MW power from its network. While chairman WAPDA told in an interview that if KESC pay dues we will provide 600MW to it.

There is a lot of criticism on KESC management, but it is also a fact that due to previous government's policies, the KESC has not been able to increase its generation capacity in the past. The government had allowed only private sector companies to generate electricity.

However, the situation has changed after its privatization in November 2005 and now there is no bar on KESC to enhance its power generation capacity. But it seems that the new management is reluctant to inject more funds in the company for the reason known to top brass. At the time of privatization, the buyer had pledged to invest US $ 500 million in KESC over a period of three years, in the first phase US $ 75 million. About one and a half year has passed but no investment was done in the company that has further aggravated the situation.

Moreover, there is also a tussle between Siemens and KESC which has not been resolved and the ultimate sufferers are the citizens of Karachi. The industrial and commercial activities of the city have badly affected due to longer-duration of load shedding affecting as well as exports of the country.

This situation demands an immediate action of the government to take serious measures to solve the power problem of mega city because the government is still holding 25.65 percent shares of the company and has recently appointed Chief Executive Officer, a retire General.

Like power problem, the traffic mess is becoming from worse to worst because in to absence of a mass transit system, the commuters are suffering financially and physically in the hands of transporters. The City District Government of Karachi has initiated a number of road development projects, which have caused traffic hindrance in many busy areas particularly during office hours, which causes slow movement of vehicles on city's roads that has also increasing the pollution in the city, which is already alarmingly high in various areas of the city.

The main cause of pollution is because of unchecked smoke emission by faulty buses, min-buses and auto rickshaws. No concrete efforts are being made to replace these environmentally dangerous vehicles. The government is claiming since long to bring CNG buses and rickshaws, besides to start checking campaign.

The promise to introduce hundreds of CNG buses on city road is yet to be fulfilled, where as the condition of existing passenger buses is deplorable. Some CNG buses were plying on the roads four years ago that have disappeared from the city. There are reports that most of them have been shifted to other cities or snuggled to neighboring countries. In short the government must take immediate action against traffic police, not doing their duties honestly, strict checking of vehicles and last but not least over come the shortage of electricity.

Naeem Qureshi.

Editorial For May, 2007

Dear Readers,

It is a matter of great pleasure for us that Energy Update has successfully completed its one year. The publication humbly started its journey with a vision to project all aspects of the energy sectors in Pakistan through news, independent views, articles, interviews and profiles. We bow our head in front of Almighty Allah that He has given us success. The initial period for a publication is always difficult and it was really a tough time for the team of Energy Update as the written material on energy sector was not easily available and we have to work hard to develop our contacts in the sector. We face some problems, but we did not give up and Alhamd-o-llillah, we passed all the initial tests and now we have emerged as the only voice of energy sector in Pakistan. We receive a positive response from our readers and it is encouraging that the energy sector is fully cooperating with us.

Energy Update not only provides information on energy sector, but it is actively participating in the the activities of the energy sector. The proof of this fact was the first every conference on power generation "Power-Gen Pakistan-2007" which was organisede in Islamabad on April 6, 2007. This gave us an opportunity to directly interact with the key players of this sector and discuss the issues confronted with the industry.

We have realized that it is the right time to give a serious though to power generation in the country because due to various political and economic reasons, the successive governments did not pay attention on the power generation. The country is facing the worst ever power crisis in which load shedding and long breakdowns of power has become a routine. The worst hit is the commercial capital of Pakistan, Karachi, where industrial and commercial activities have virtually come to a standstill due to prolonged power breakdowns. The power demand often increases as the mercury shoots up in summer, but the power generation capacity of Karachi Electric Supply Corporation (KESC) has not increased over the period of time. After the privatization of the utility company, the situation has become even more serious. No one is ready to take responsibility of the situation. The government, in the past failed to increase the generation capacity of the KESC despite the fact the power demand increased in the city manifold. With the economic growth the demand of electricity has increased in recent years, but no serious effort has been taken to increase the generation capacity. Even the decades old Karachi Nuclear Power Plant failed to provide electricity at the start of summer season, when the power crisis emerges.

The private sector management blames the government and Wapda for the situation, where as the government says the management has failed to provide committed investment in the KESC for increasing power generation.

To overcome the energy shortage in the country, no serious efforts are being taken to utilize the indigenous resources. A huge wealth of black gold in the shape of Thar coal lies unutilized and no serious attempt is made to use that source for power generation. The newly formed Alternate Energy Development Board (AEDB) is striving hard to involve private sector for power generation through solar, wind and other resources, but it will take time to fruitation of those efforts. There are reports that the government has issued licences to more independent power producers (IPPs) and it is hoped that the situation would be better when those IPP projects would be completed.

Naeem Qureshi

Editorial For April, 2007

Dear Readers,

Assalam alaikum.

Just as we are about to enter into the summer, the spotlight is once again focussing upon the power companies. This is especially so because frequent power outages aare raising the ire of the citizens, and in view of the rumblings of gloom and doom sounded out by the powers-that-be (pun intended!)

To make matters worse, in a surprise sudden move, the Board of KESC upped and removed the CEO, Frank Scherschmidt. This removal came at the heels of the breaking scandal about the 20 year old generation plant being ordered by Seimens for the price more than a new one costs.

Mysteriously, no coherent explantion has been offered for the goings on, which deepens the conviction that there is more to it than meets the eye. Especially as we have a retired army man in a supposedly privvatized utility company, someone with absolutely no experience of the power sector. Maybe it was thought that a 'uniform' presence would ensure control over matters when the power shortages and outages result in protests in the coming summer. After all, in the new world order, preemption is the name of the game.

It is because of the dire warnings that have been issued by the power generation sector after last years painful summer that Energy Update has taken it upon itself to explore the issue in an indepth manner. Continuing our policy to bring all stakeholders on board a single platform to discuss key issues and look for solutions, the magazine is hosting a full day conference on power generation in Islamabad on April 6.

We are confident that by bringing all the players together, and listening to the views of the experts about the current scenario and future prospects, we shll be able to bring some clarity into the murky waters of the power generation field.
Consequently, this isssue of the magazine has been totally dedicated to power generation, with exclusive articles written by our industry experts.

We hope the material contained within the pages of the current issue, as well as the report that the next issue will carry, will give a fairly broad and in-depth over view of the power sector.

It also humbles us to announce that by the grace of Allah, we are almost into the second year of publication. Our next issue will be an annual which will carry an industry over view. We would appreciate comments and advise from our readers about the way this magazine has developed over the past year, and which path they would like it to take for the future.

We look forward to hearing from you in this regard.

M. Naeem Qureshi



Editorial For March, 2007

Dear readers,

Assalam alaikum. We are barely out of winter and the scourge of load shedding is upon us once again. Power outages and breakdowns seem to again to be becoming the order of the day. The power utilities had warned the consumers to expect another trying summer, while they try to upgrade and modernize their infrastructure.
What, however, is encouraging that now we are hearing more and more about the need for looking at alternate sources of energy, from the public as well as private sector companies. Many projects have already been set up and have shown their viability. What is needed is a greater awareness at all concerned levels so that these avenues be explored. Nature has gifted Pakistan with the resources that can be tapped to its advantage. What is needed is a clear strategy and vision to develop means and resources that will make us independent, and also pose no threat to the environment.
In this connection it is also heartening to note that the fraternity itself is making its presence felt, through conferences, exhibitions and the use of print media, to familiarize the people with the alternate means of energy, as well as embarking on collaborative ventures within the country as well as with outside investors.
Taking cognizance of this importance aspect of the energy sector, Energy Update brings to you a comprehensive coverage of conferences held to discuss the issue of alternate Energy, and have devoted the entire issue to bring to you an in-depth analysis of this vitally important issue that will impact all our lives in view of the rapidly depleting sources of fossil fuel.
Another reason to really sit up and take notice of the alternate sources is because of the deteriorating air quality because of the fuel emissions of vehicles and the generally poor state of the environment. We need to focus on sustainable means to drive our economy.
In this connection, it would be prudent to not just focus on alternative but renewable sources of energy as well. For the present, however, with the looming power crisis, the magazine is endeavouring to bring all stakeholders of the power generation sector on one platform so that the relevant issues can be thrashed out and solutions sought. This will be done at a high level conference hosted by Energy Update next month in Islamabad.
The following issue will carry a comprehensive report of that conference.



Editorial For Febuary, 2007

Dear readers

Assalam alaikum,
This month we have seen a lot happening on all the sectors of the energy front..., internationally as well as nationally.

Internationally the oil prices, for the present, seem to have dropped to a level where the world can have a breather, but this has, thankfully, not reduced the attention focussed upon the need to look for alternate sources of energy. While the USA remains in denial of the need to sign up the Kyoto Protocol, countries like England and Germany are going ahead with mega wind and solar energy projects.

In Pakistan , finally the much awaited decision about the Baghliar dam being built by India on the river Chenab has been announced, wherein the neutral expert Raymond Lafitte upheld three of the four Pakistani objections over the design of the dam. However, the objection over the spillway was not upheld but Pakistan reserves the right to bring up that issue at an appropriate forum at some other time.

This was a major issue further straining the already compli­cated relations between Pakistan and India, and needed to be resolved as soon as possible because as the prophets of doom and gloom predict, the next wars are likely to be over water more than anything else. The power generated through these water resources will be the vital driving forces for economies, hence the contentions.

The economic overdrive that the country is witnessing has also necessitated the formulated of long term plans that can be sustained for the next decade and a half. The Ministry of power and all the other departments, authorities and what have you need to develop a synergy so that a composite plan can be developed, and measures delineated to make up for the impending gap between demand and supply that is looming so ominously.

To make its humble contribution toward highlighting the energy related issues of Pakistan and the measures being taken by different sectors to address them. We have decided to move beyond the realm of print, and become more interac­tive by co-hosting events with the industry stakeholders to better highlight these issues.

Our recent attempt to do this through the collaboration of the LPGAP, wherein we managed the country's first ever con­ference on LPG was a great success and has encouraged us in planning our next one, which will address the important issue of power generation.

We look forward to the support of our readers and industry in these attempts, and would be grateful for their feedback




Editorial For January, 2007

Dear readers

Assalam alaikum and Season's Greetings!
The New Year brings with it a renewed resolve to stay on top of developing stories and issues that impact the energy industry with greater vigilance, and a deeper involvement.

As a first step, Energy Update, despite its infancy, has taken a big step by joining the LPGAP to co host a major Conference on the “Prospects and Challenges of the LPG industry in Pakistan.” We feel that the fortunes of this industry are in a state of flux, and need to be focussed on at a forum where all the stakeholders can interact with each other.

Energy Update will present a detailed report of the Conference in its subsequent issue. However, in the current issue, we cannot help but focus on some very alarming developments wherein the officials and utility companies are presenting a doom and gloom scenario for the consumers who had barely recovered from a long hot summer.

We need a long hard look at the way the consumers are treated in this country. The service sector and utility companies always have ready reasons for their poor services or the breakdown, but we have to get out of this cycle of the blame game which allows the consumer no relief.

Delays in imports of plants or cost overruns may sound very well to inquiry committees or auditors, but bring cold comfort to those on the receiving end. Perhaps the consumers really need to find a voice to be able to get these organizations to deliver to them what is their right.

On the international front, escalating prices, and escalating regional instability do not bode well for economies, stable and instable. The planners may have to go back to their drawing boards if they do not build any contingency plans into the future projects.

This is especially true for the planners in Pakistan who seems to, after every little while, announce big plans for the dams and IPI pipleline, which as being touted as the panacea for all our energy ills. We cannot remain oblivious of the fact that both of these ‘solutions' are heavily dependent upon continued regional stability, which no one can ensure. There simply have to be other dependable alternatives which can deliver long term benefits in case these do not come to fruition.

May the new year be better than the one past.



Editorial For Nov. & Dec, 2006

Dear Readers,

Assalam alaikum.

It is said that change is the only constant, and nowhere is it more apparent in the fluid (metaphorically as well as literally) world of energy. A world where the constant shifts in supply and demand of fuels that are the life blood of modern economies lead the prices a merry dance, which in turn, impact the economies in more ways than one.

The plethora of conferences and seminars extolling the virtues of one type of fuel over the other indicate a sense of urgency not only on part of an industry on whom the realization has finally dawned that there really is a limit to the resources Mother Nature had endowed us with, but also on part of the users and decision-makers who are now looking in directions that would not only sustain them in the future, but would also enable them to commence some damage control as far as the environment is concerned.

Each segment is promoting itself all the panacea for all ills, which of course is a tall claim… hence the term ‘energy mix’ which has come to denote a rationalization of the use of the available resources, whether indigenous or imported.

As a publication, Energy Update will endeavour to give in-depth coverage to all segments, jointly, while focusing specially on one segment in each issue. This issue focuses on the increasing use of CNG in automobiles, within the country as well as all over the world. It is a matter of pride for us that the publication was present at the IANGV Conference at Cairo, where a sizeable Pakistani contingent had traveled to keep itself abreast of the latest developments in the field of CNG.

CNG, for the moment, seems to hold center stage, as spotlight will be focused on it once again when the EcoFuel car on its attempt to make a round of the world fuelled only by CNG in an attempt to enter the Guinness Book of World Records will be passing through Pakistan amidst an expected media blitz. While its purpose is to generate funds for the SOS Children’s Villages, there is no doubt that the success of the venture will act as a spur to others to look seriously towards CNG as a fuel that can be used for long haul personal vehicles as well.

For its part, Energy Update will attempt to keep its readers abreast of all such developments.





Editorial For October, 2006

Assalam alaikum Readers,

The energy sector seems to be undergoing an upheaval the world over. Instability in the major oil producing region of the world had not only led to unprecedented price hikes, playing havoc with vulnerable economies, it had also led to a rethink about the dependence on the fossil fuels. This is why we are seeing a flurry of activity on the alternate energy front.

This is an encouraging sign indeed as it will diversify the resources available, and lessen the pressure on them. Development of the potential of cleaner fuels and technologies hold a ray of hope in this and there is a need to build a broader consensus and build a network of the decision-makers who will be able to device policies that will have an eye on the future…a future that hinges not only on the economics but on the environment friendly policies.

While OPEC and their major buyers grapple with the issue of pricing and production, closer at home there are several unresolved issues that are agitating the energy sector. Foremost amongst them is of course the issue of prices, especially after the Government has now come out with a categorical statement that fuel prices will not be lowered despite the drop in the international oil prices.

The reason given is that the government had been absorbing the hike itself and shielding the consumers, something the consumers will be hard pressed to believe because there seems to be no shield for the consumers who are slapped with an increase every now and then.

Petrol is not the only commodity whose pricing is subject the uncertainty. The LPG sector too is trying to make its voice heard, as the policy, especially for LPG use in vehicles has thrown many other questions open, especially with regards to the issues of safety of operations and filling stations.

This month’s issue also carries a report on the recently concluded 3rd. CNG CONEX International Conference and Exhibition, which has proved itself as an important event in the calendar of the events of the energy industry.

As before, we look forward to hearing from you whether to point out our short comings so we can remove them, or to suggest to us anything relevant that deserves to be covered within these pages.

From the team at Energy Update, Eid Mubarak to all of you.




Editorial For September, 2006

Dear Readers,

Assalam alaikum.The vibrance of the energy sector has been manifesting itself through a flurry of activity being witnessed the world over in general, and in Pakistan in particular.
The Iranian nuclear issue has been grabbing the headlines once again. Despite the techies admitting amongst themselves that Iran does have a case for energy acquisition, it is now more a matter of an eyeball to eyeball between the politicians, with the world waiting with bated breath to see who blinks first.
Meanwhile instability in the hotspots of the world keeps influencing the oil prices, bringing into sharp focus the need to develop indigineous resources,as well as alternatives to the existing solutions, especially the fossil fuels.
Pakistan is no stranger to these concerns, and here too economists and environmentalists have finally achieved critical mass. Their voice is now being heard, and the energy sector as well as the government is rapidly sitting up and taking notice.
While the attention is focused more on the figures apppearing on the bottomline, environmental NGOs are drawing attention to the need for developing clean fuel resources to ensure a healthier future.
Our current issue is carrying within its pages a special section focussing on one such effort by way of the CNG CONEX 2006. This major event of the energy industry is a welcome slot in the calender of events of this industry, and one hopes that it serves as an excellent learning experience for all the visitors and participants.
True to its earlier promise of tackling difficult questions head-on, Energy Update also brings into discussion the decision of introduction of ethanol through the widely propogated e-10 project. We have attempted to put into words all the pros and cons of its introduction, and are confident that this issue will generate a healthy debate, throwing light on its different facets.
As with many new publications, we admit to the fact that we are still on a learning curve, and because of that, there are lapses in the content and design of the publication. However, rest assured that we consider improvement to be a continuous process, and are attemting to overcome the shortcomings all the time, while seeking patience and support from all of you.





Editorial For July & August, 2006

Dear Readers.

Assalam alaikum. For thoughtful people, anniversaries are more an occasion for stock taking than mere revelry and celebration. By the time these lines reach your hands, our country Pakistan will have completed 58 years of its existence. While it has now assumed the connotations of a cliche, we are indeed standing at a critical juncture of history, where, in the words of the prophets of doom, the energy wars are already taking place and the water wars will be next!
How prepared are we to deal with this scenario is what needs to be urgently, dispassionately, and honestly assessed...... by the technocrats, whose opinions must be given due weight by the politicians who simply must rise above their party lines and vested interests or become irrelevant.
We need to have a better management of the available energy resources, whose footprint benefits only a fraction of the population even after 58 years of our existence. This vast majority of Pakistanis is also deprived of clean drinking water, and has to face the reality of depleting water resources which can have catastrophic consequences in general, and on the agrarian economy of the country in particular.
It is the cost of these ‘consequences' that must act as a spur to the search and development of alternate energy resources, and the commercially feasible exploitation of the huge coal reserves we have in this country, without in any way compromising the environment through the existing energy generation measures or the ones developed in the future.
Environment-friendly measures must be built-in in all development plans, and it is heartening to note how well the energy sector of Pakistan has shouldered its responsibility in this connection, winning accolades at the recently concluded Annual Environment Excellence Awards given by the National Forum for Environment & Health.
The current issue carries a report of the event as well as profiles of the winning companies, which serve as role models for other industrial sectors.





Editorial For June, 2006

Dear Readers.

Assalam alaikum. My entire team would like to thank you on the reception accorded to the inaugural issue of Energy Update. You have been swift and forthcoming with your feedback, which came in the form of appreciation, criticism, advice and encouragement, which will go a long way in helping us to make it a publication worthy of your attention.

The inaugural issue coincided with POGEE 2006, the showcase of the energy industry We were lucky to have brushed shoulders with some of the industry stalwarts whose experiences of the global energy sector were many and varied. We were also fortunate to have been able to enlist the help of some of them for the nascent publication, and would like to welcome them abroad the editorial team.

This issue of Energy Update not only carries analytical, research based articles by our new team members, but also starts a new feature by the name of Focus on Company. We have also endeavoured to bring within our purview matters of immediate nature, like the frequent power breakdowns, especially in Karachi, and have attempted to present a flip side view for the sake of objectivity.

Along side our efforts at content, we shall continually strive to enhance its printing and production quality so the industry can be rightly proud of its publication.






Editorial For May, 2006

Dear Readers.

Alhamdollillah Energy Update monthly has seen the light of day. For long a need had been felt for a publication that could serve as a platform for the energy industry of Pakistan. We would not like to commence our publication with any tall claims, but our stated aim is to become 'voice of the energy industry.'

We are grateful for the encouragement and support we have received from many industry stalwarts, who have been very generous with their advise as to the direction this publication should take and the kind of content that should go in it.

We are also grateful to the advertisers, who had faith in our abilities, and despite there not being a product before them, reposed their trust and assisted us in making this publication possible.

As a policy, we would be unbiased in our analysis, truthful in reporting, scathing in our criticism, liberal in praise of the positive, and open and receptive to suggestions, advice and critiques that assist us in making Energy Update a publication that the industry would be proud to call its own.

Our subsequent issues will have a regular reader feedback column and we will be maintaining a presence on the web, and will welcome comments which the editorial team will consider as a valuable assistance in making its work easier.

We hope you will find our humble efforts worth your while and will 'energize' us with your input.