1. Introduction

1.1 The Power Crisis of Pakistan

For the past 10 years, Pakistan has faced the dilemma of power shortage in the country, which is overlapped with a demand for electricity swelling each year by 2.55%-5% each year (Vats, 2016). The issue of Electricity Shortage can’t be taken easy hearted as it directly affects the economy of Pakistan (Khalid Mustafa, 2016). This is reason why the development of energy sector has been prioritized by the decision makers in both China and Pakistan in the primary phase of CPEC. The country faces power cuts or load shedding of upto 8 hours, as the massive figure of 2,500 to 3,000 Megawatts electricity is lacking from the system (Khalid Mustafa, 2016)

Being of prime priority among different development sectors of CPEC, US$34 Billion have been apportioned so far for the power sector. It is hoped that the investments in the power sector will help curb the problem as 16,400 Megawatts of power is expected to enter the System (Houreld, 2015). In reality energy crisis is not just a child of low production capacity as Pakistan’s installed capacity for electricity production is 22,797 Megawatts and the country’s total demand amounts to 17000 Megawatts. The problems in fact are multifaceted from bad governance, poor resource management, and obsolete installed technology to it being coupled with lack of recoveries and the dependence upon an expensive fuel mix for power generation causing power generation between 12- 13000 Megawatts only (ShafeiMoizHali, 2017). The figure below explains how these problems lead to the crisis Pakistan faces today.

Figure 1 Energy Crisis

Source: (Shafei Moiz Hali S. I., 2017)

2. ENERGY POLICIES OF PAKISTAN

For a developing country like Pakistan, the energy policy is critical to the development and nourishment of the economy. The GOP has issued policies pertaining to energy, however, these policies have failed to address the power crisis in Pakistan, which has been brewing over the past couple of decades and the absence of long term policies to address the issue have contributed to the crisis. The study takes a look at various energy policies over the years and analyzes them through the lens of the Five – E approach of analyzing policies and tries to decipher whether these policies were myopic in nature or not and suggest a way forward.

Figure 2: Pakistan’s Energy Policies over the Years

Table 1: Summary Review of Pakistan’s Power Sector Policies Since 1994.

3. THE 5-E- APPROACH TO ANALYSE ENERGY POLICIES OF PAKISTAN

When public policy is to be analyzed, two main aspects of the policy demands particular attention. Those two aspects are the “effects” of the policy and “implementation”. The effects part helps gauge the effectiveness of the policy in terms of addressing the problem it intended to address. Since many policies are brought about with good intentions and on paper seem effective but fail to address the problems, due to deficiencies within the implementation phase of the policies. The 5-E approach of policy analysis is one of the basic models of analyzing public policies and within this approach the policies are measured up to five benchmarks; Effectiveness, Efficiency, Ethical Considerations, Evaluation of Alternatives and Establishment of Recommendations.

In this study, the various energy policies of Pakistan have been briefly explained in the sections above to help build an understanding of the state of affairs at the time of their implementation. From table1, which provides a summary of all the energy policies, we can infer both their performance in terms of their respective effectiveness and implementation and analyze them according to the first 4 aspects of the 5-E Approach and after the analysis recommendations will be provided in the end as a way forward. .

Table 2: Performance of Pakistan’s Energy Policies Based on the 5-E Approach.

Table 1 and 2 above show us that Pakistan’s energy policies have not performed well over the long-term as can be seen in the figure 3 below that Pakistan’s power supply and demand gap has been steadily widening and none of Pakistan’s energy sector policies have impacted in reducing this gap for the past 25 years.

Figure 3: Pakistan’s Power Supply and Demand Gap 1994-2015.

Source: (Hydro Development Institute of Pakistan -2016)

4. CPEC A SOLUTION FOR THE ENERGY CRISIS IN PAKISTAN?

In November 2015, the CPEC Committee pledged to complete 14 energy projects by 2018, but things on the ground suggested otherwise (Vats, 2016). The Secretary of Ministry of Water and Power in Pakistan is Mohammad Younus Dagha who issued a statement that, “By 2018 the production capacity would be 30,938Megawatts whereas demand would be 25,961Megawatts and availability would stand at 26,590Megawatts”, but upon a closer look at figures and the development of projects it becomes clear that the 2017 targets of reaching electricity production rate of25,080Megawatts to meet the targeted demand figures of 24,262Megawatts seems exaggerated as the available production capacity has reached only 21,096Megawatts because so far only 2,665 Megawatts have been added in to the entire system in the past three years(Vats, 2016). Later on, the Minister himself admitted his mistake, when he was thoroughly questioned by the media regarding progress of the CPEC energy projects at the National Assembly Session(RadioPakistan, 2016).

Almost all the enhancements planned by the government fall under the China Pakistan Economic Corridor (CPEC). Very little foreign investments from other countries are coming into Pakistan. The funding design for these projects is distinctive, funds for these projects will be dispatched to private Independent Power Producers through the Exim Bank of China, and the responsibility of setting up these electricity plants lies with the independent electricity producers, thus highlighting the fact that neither the Chinese government, nor the Government of Pakistan is going to be responsible for the setting up of the projects. The interest rates for these investments to sponsor production is set between 5-6%, the Government of Pakistan will buy electricity from these projects at pre-negotiated rates (Rehman 2015). The CPEC will greatly inherit the benefits as well as the dividends from the overall Chinese dream provided Pakistan fixes its electricity infrastructure (ShafeiMoizHali 2015).

5. CONCLUSION AND RECOMMENDATIONS

Pakistan’s economy is not growing at its potential, and this major snag in growth is owed a lot to the energy crisis, while conducting the review of the literature various studies focusing on the case of Pakistan indicated that Pakistan’s economic growth potential is tremendous but structural problems and inefficient use of resources hold Pakistan back. Long term Energy Policies are requisite for energy security, sustainability and greater certainty. Pakistan has followed a trend of short term energy policies that have been low on the mark of being effective and efficient, which have come at regular intervals of 2 to 4 years. The ever widening gap between electricity demanded and electricity supply over the past few decades is proof of the ineffectiveness of these policies. Many times, Pakistani Government has changed the energy policies, due to public pressure for example: back in 2012, when Government reversed the decision, made in the 2010 energy policy and resorted to nationalization, the constant change in policies creates a situation of uncertainty, redundancy in efforts and creates hurdles for development of energy security and sustainability. Investment in Energy Sector is important, as Pakistan’s recent Energy Policies have encouraged private sector for power generation. Long term policies are the foremost testimonial and backing of the state that even if the political scenarios in the state changes the direction remains the same. Thus the long term policies help build trust among the investors that a certain environment for investment welcomes them.

In the future, yet alone even in our present times our energy demand is increasing. With the upcoming technology boom, we are in need of more and more energy which needs to be provided through modern technologies.

For sustainable energy sector growth, long term policies are the end solution, they aim high and have strategies that work to meet with the demand while keeping in sight the ethical considerations. Short term policies often look for an immediate solution without really focusing on the sustainability and climate concerns. Short-term solutions may aggravate long-term problems which have happened in the case of Pakistan.

The Foreign Direct Investment under the umbrella of CPEC is a major opportunity for Pakistan(Shafei Moiz Hali T. S., 2015), especially in the arena of resolving Pakistan’s energy crisis but theoretically it can be seen that, once again most of CPEC’s investments in the power sector are targeted towards the power generation side and less focus is given to the distribution and demand side. It is evident from the energy policy review section that the 2013 energy policy proposes the implementation of structural reforms but, despite the presence of such a policy negligible investment under the umbrella of CPEC is directed towards aiding in the implementation of this policy and in improving and modernizing Pakistan’s power transmission system. Similarly, only a marginal share is allocated towards the development of hydro power plants in Pakistan, under the umbrella of CPEC. Whereas, Hydel power generation demands considerable attention in Pakistan, in-order to make Pakistan’s energy-mix more sustainable. In terms of Pakistan’s policies directed at managing Pakistan’s energy needs, a comprehensive policy framework targeting energy efficiency is deficient to tackle problems of electricity wastage, cost and usage. The major concern regarding the long-term performance of the CPEC backed energy projects is that, once these projects become operational, they will contribute towards Pakistan’s power sector in the form of Private or Independent Power producers from which electricity will be bought by the government and the electricity will have to be distributed through Pakistan’s state owned and highly inefficient distribution companies and their network which is prone to annual losses of 25%, which by all standards is very high. However, it is not a cause for alarm, as the CPEC is a mega project and its culmination and delivery will take a long-time and there are annual joint review meetings between the two governments. In joint meetings, projects are added and subtracted each year and results from such researches will help recommend plausible policy recommendations which will help steer the FDI for the development of CPEC in the right direction so that the energy crisis in Pakistan can be effectively resolv