FORMULATING AN ENERGY POLICY
SYED AKHTAR ALI
Feb 21 - 27, 2011
Policy can be a drag and a liability if it is too ambitious, attempts to lay down ground rules for every micro issue, does not have openness and flexibility (too much of which can be counter productive to a policy, nullifying the very purpose of issuing a policy), is prepared without consultation of stakeholders (without being a hostage and victim of powerful vested interest) etc. Policy can be annoying to all as it tries to optimize and balance the interests, and consequently every body may not get objective fulfilled.
Energy policy can be a thankless job, as it may try to reconcile producer and consumer interests; producer wanting to have more profits and returns for share-holders which may maximize investments and supply; and consumers with their limited means and general poverty in this country, would want to have it dead cheap.
Expensive energy may otherwise lead to widespread stealing bordering looting, as is the case with electricity in most parts of the country except Punjab. Ironically, in Punjab natural gas theft is the highest than in any other province, perpetrated, not by the poor household but by industrial sector. Then there are supply chain dependency and linkages. If the policy satisfies primary energy sector, it may leave little margin for electricity producer, sending a chill wave to them. All problems are for a sensitive and conscientious policy maker and government functionary. For those who don't care, there is no issue. People don't expect much from them, lose hope and look forward or pray for their exit or ouster.
Policy has to have a heart, and not mind only. It has to consider the weak and the poor, who cannot often defend it, and is not adequately represented and lobbied of. It should provide for pay-off and compensation of sorts to the intended and unintended policy victim. A dam may be a public good, but may displace a lot of people and deprive them of their livelihood. Alternative accommodation and resettlement, sharing of the output (free or near free electricity), sharing of royalties, preferential employment etc are the usual ways and means to broaden the acceptability of projects and policies. Opposition to Kalabagh dam in Sindh could be ameliorated, if the claimed loss of land and livelihood can be internalized in project costs.
A policy makers and a functionary must integrate himself with stake-holders intellectually, but insulate from stake-holders/vested interests socially. In our set up, secretaries and officials routinely wine and dine, attend marriage ceremonies, travel on the expenses of the company with family and entourage, have their son's tuition of foreign universities picked up and to harmlessly stay in London apartments of the business friends. There are apparently no rules regulating the social conduct of officials except ISI regulating foreign mission's contacts. These kinds of officials are usually very popular among all kind of people, bosses, juniors, clients, public, friends and family. The one who has some qualms about propriety and has some principles, is often disliked and abhorred by almost every one and even suffers from the contempt of his family, particularly of the spouse. Often he may not be that suave and welcoming and receptive open-door type, as his life is often difficult. He cannot and does not invite and entertain. Such a person is awarded various names and pejorative like Khushka, Be-faiz, non-practical etc.
In Pakistan, we have special and additional sets of problems. The department secretaries may be coming from totally irrelevant departments like Hajj and Auqaf depending on their lobby and clout with the government in power and other landed interests and connections. On the other hand experts from line departments such as WAPDA etc may be to narrowly focused, specializing in only wire and cable and transformer. Consequently, except for Hajj policy, all policies are usually made with a heavy dependence and input from international agencies. Some times, local bureaucracy cannot even write the TORs for such studies and input. Often this dependence also stems from the loan conditionalities. Quite a few of these consultants often are strong disciples of John Adams who try to implement all economic principles of user charge ,pricing ,resource allocation, and efficiency etc. ,trying to specify treatment without much regard and sensitivity to the condition of the patient. A patient can die of the right medicine due its side effects.
So should we have policy for policies? We certainly need to train our bureaucracy well, introduce some sensitivity to specialization and expertise in recruitment and placement policies. We need to involve and develop think-tanks, NGOs, foundations etc. The political parties should get deeper into policy making while being out of power, by instituting the shadow cabinets, not for being an alternative for military dictators but for developing expertise and capability. We see that finance ministers invariably come from outside having a lobby in the World Bank or IMF. One can be acceptable to these veritable international institutions and yet be honed in the domestic political process. Unfortunately, in today's circumstances, these are mutually exclusive attributes.
Competition, competitive pricing, decontrol of prices, market development are the usual catch phrases and prescriptions of foreign consultants and their parent institutions. Competition, except among the poor and the labor, has seldom worked in countries like ours. Often it is collusion and conspiracy among the producers and of the controller which may hold sway, which kind of behavior may attract severe penalties including prison sentencing. We have noticed the difficulties of Competition Commission of Pakistan. Penalties are resisted tooth and nails and not paid; if at all some officials are stupid enough to risk their jobs and even safety. Policy makers have to be watchful of such often external advice. Conspiracy theorists may go as far as blaming the donor agencies for conspiring against our national interest and for having an agenda to keep us begging and underdeveloped.
There are Petroleum Policy, Power Policy, renewable Energy Policy etc. It may not be a bad idea to issue an Energy Policy document, that integrates the residual , remaining and interfacial issues and defines vision ,goals and objectives , while introduces the sub-policies. There are multi-ministerial issues connected with ministries of Petroleum and Water & Power and even of Environment where in joint determinations are required and are lacking at this moment, some of which have required prime-minister's interest and intervention in the recent past, although the latter may have been done foe stressing and emphasizing the need to fast-track processes and solutions.
There are specific issues that may have to be answered by such policy such as the following: 1) Although energy or electricity for all may be a good slogan or vision, Some quantitative target and schedule should be included not of the rural electrification, but also for thermal/cooking energy need, in which context LPG policy and its pricing become a major issue. Also of concern is gas distribution network's expansion. Biogas is also an important component of rural energy policy. Electricity and gas distribution to Katchi Abadis is to be an aspect worthy of attention in policies. 2) There is today confusion as to the role of regulatory bodies. IN this respect OGRA's performance and conduct has received external criticism. Where do the Ministries' role end and regulatory bodies begin? There are extreme cases of liberty and control at the same time. For example, NEPRA is at almost unlimited liberty at approving capital costs without defining limitations or guiding principles and criteria. In fixing rate of return, NEPRA has arrogated authority to itself, while it should be given in an energy policy announced by GOP. On the other hand, NEPRA has been constrained to waste its time and energy in Quarterly Tariff determination of DISCOs , in addition to the monthly announcements of Energy prices. NEPRA cannot do anything about it. People are crying hoarse that excessive profiteering is being resorted to by the LPG companies and that LPG prices are unreasonably jacked up. Ministry of Petroleum criticizes OGRA for inaction and inefficiency, while OGRA argues that it lacks jurisdiction. 3) although there is a renewable energy policy, there are serious issues of Capital costs. Infact, jacking up of capital costs are a perennial issue; NEPRA does not seem to have guidance in this respect. They are resorting to common sense or/and looking the other way, in place of a policy guidance.4) There used to be a uniform tariff, irrespective of costs, subsidies filled the gap. As subsidies go, what is to be the policy and criteria or the principles forwarding the costs to the regions? Some rules of tariff differentiation among user groups and the cross-tariff subsidy; 5) some policy on T&D losses and their reduction, schemes and incentives; 6) Royalties issues on hydro/Tarbela, gas royalties and well-head prices , resolving the grievances of producer provinces like Balochistan.7) The policies of appointing Regulatory bodies' management such as members and chairmen of NEPRA and OGRA remain either unimplemented or seem to suffer from gaps and aberration. One has never come across the advertisement for recruitment of chairman or members of NEPRA , although one would have noticed advertisements for OGRA members. Chairman NEPRA's appointment is under litigation, with claims that he does not have the right qualifications, although I do not really believe in rigid qualifications parameters. For such positions, selection committee's determinations should get priority. Similarly, members keep lobbying chief ministers nominations of provincial quota. These senior appointments should be done on merit. Any way now with the 18th amendment, all regulatory bodies being Federal Subjects, should mean that such provincial requirements would no longer apply.
Surely, there may be some rules and procedures, but these are a patch-work requiring integration and consolidation and removing gaps and writing out un- written arbitrary practices. Users and stake-holders should know about it, removing monopoly and undue discretion and thus obviating the abuse of power and its associated manifestations. Lastly, announcing a Policy is a good way for politicians and ministers to take charge of their portfolios and greater say in affairs than the day-to-day determinations of the bureaucracy. It is a good way of getting known and publicizes their work and acquires respect and credibility among the public.