An Anodyne Appraisal Of Inherited Challenges

The PML-N government has completed its mandated period of five years and probably it is the right time to have an anodyne view of its achievements in regards to the challenges that it inherited. My considered view is that its overall performance has been far ahead of the previous government and it can rightly boast of having tackled the challenges to a great extent. My assessment is not based on what the government has been saying but what international lending and rating institutions have been saying and continue to say about the state of economy in Pakistan. There is a universal acknowledgement of the fact that the GDP growth rate rose from dismal 3pc to 5.79pc, the budgetary deficit has been brought down to 4.9pc from 8.4pc in 2013 and the inflation rate has been kept at a single digit. Pakistan has also been classified as an emerging economy by the World Economic Forum. The latest UNDP and Moody’s reports also paint a very rosy picture about what has been achieved. Moody’s particularly emphasised the element of transparency which according to its report was responsible for the uplift of the economy. It is perhaps also pertinent to mention that the Transparency International in its four consecutive annual reports also indicated a nosedive in the corruption index and transparency in transacting government business.

Terrorism, which posed an existentialist threat, has been brought under control through bold and imaginative steps taken by the government and the sacrifices rendered by the security and law enforcing agencies. Peace has returned to Karachi and the situation in Balochistan has also improved a lot.

However in my view the biggest achievement from futuristic perspective is the success achieved by the government in putting the country on the road to energy security. The last five years may not have been so auspicious politically for the PML-N government due to a number of factors but it surely has been successful in surmounting the burgeoning energy crisis. It is a verifiable fact that the government has added more than 10000 MW electricity to the system resulting in almost an end to load-shedding. It is only happening in the areas where electricity is stolen, where line losses are maximum and where they system old and not capable of carrying the additional load. Efforts are however on the anvil to replace the distribution system and reducing the line losses.

The process of tackling the energy crisis started with the most prudent decision to import LNG and consequently the signing of an agreement with government of Qatar in February 2016 for the import of 3.75 million tons of LNG per year for a period of 15 years. To handle the import of LNG the government built two terminals at Port Qasim with the help of a consortium of private sector. Pakistan was importing 600 million cubic feet of LNG through its first terminal and with the second terminal becoming operational in November 2017, the total volume of LNG import per day has increased to 1.2 billion.

The importance of the agreement for import of LNG can be better understood by having a look at the ground realities in regards to power generation. Presently more than 50pc of the total energy mix of Pakistan including hydel power, fossil fuel, nuclear and renewable, is based on natural gas. Pakistan ‘s constrained demand for natural gas is 6,000 MMFCD against a supply of 4,000 MMFCD and the unconstrained demand for natural gas is estimated to be 8,000 MMFCD. Over the last ten years production of gas in Pakistan has remained stagnant at 4,000 MMFCD and the new gas discoveries have barely kept pace with natural depletion of existing gas fields. In view of the difficulties in completing the trans-regional gas pipeline projects like TAPI and IP, import of LNG was the only solution to the energy needs till such time there is a substantial change in the energy production mix and shift towards renewable energy resources.

LNG imports from Qatar reportedly are meeting 20pc gas requirements of the country. In terms of impact, it is estimated that it would help in the generation of 2,000 MW of electricity at a much cheaper rate; it has already revitalised the fertiliser and other industries, besides reviving the fortunes of the CNG industry which almost faced extinction before the PML-N government took over.

Presently the re-gasified LNG is being distributed through the existing distribution networks of SSGPL and SNGPL but in the long-run a separate network will be constructed for the purpose as the existing network is not capable of coping with the increased demand for gas. An agreement with Russia has been signed for the construction of a gas pipeline between Lahore and Karachi costing $2 billion. The government has also completed 90pc work on the construction of another pipeline from Karachi to Lahore which hopefully would become operational in the near future. LNG, as is evident from the foregoing facts and the likely increase in its demand as envisaged, is poised to play a role of game changer as far as production of power and running the industries is concerned. The decision to import LNG was not only timely but a visionary step notwithstanding the cynical attitude of the detractors of the government and the political elements essentially hostile to it.

Apart from import of LNG for energising the closed power units, the government also strived to surmount the energy crisis through other sources by setting up new power generation units. Under the CPEC power producing projects with an accumulated power generation capacity of 10,640 MW were unleashed and almost all of them would become operational by the end of 2017-18. Another 6645 MWs of early harvest project in the energy sector are also on the actively promoted list.

The commitment and dedication with which the PML-N government has focused on ending energy shortages in the country is beyond reproach. The hall mark of the government strategy in regards to power generation has been more emphasis on renewable energy resources and increasing their contribution in the energy production mix. Setting up of projects based on indigenous coal to produce electricity, conversion of the existing plants to coal based entities and reliance on solar and wind energy are the steps in that regard. This would surely reduce the production costs and the provision of electricity to the domestic and industrial consumer on cheaper rates than at present. The country surely is moving towards energy security which is an essential and indispensable ingredient of socio-economic progress.

In the long term there are also plans for producing 30,000 MW of electricity for future needs and sustaining the process of development which is likely to be unleashed with the completion of all projects envisaged under the CPEC.

(Published in Monthly Tribute International on 01-06-2018)