Lead story from September issue of Centerpoint
While in many respects a troubled country, Pakistan in recent years has experienced robust economic growth. Panelists at a recent Asia Program conference, however, speculated that underlying fiscal problems might be jeopardizing that growth.
Meanwhile, higher energy consumption has placed greater strains on the country’s energy resources. During President Bush’s visit to Pakistan earlier this year, he and the Pakistani president committed to developing alternative energy sources. Pakistan's current and future energy needs was the topic of another Asia Program conference on June 23.
Fueling the Future
Natural gas and oil supply 80 percent of Pakistan’s energy needs but current energy consumption vastly exceeds the supply. For instance, Pakistan currently produces about 18 percent of the oil it consumes, fostering a dependency on imports that places considerable strain on its financial position. Meanwhile, hydropower and coal are underutilized, though Pakistan has potentially ample supplies of both.
Mukhtar Ahmed, energy adviser to Pakistan’s prime minister, noted 40 percent of Pakistani households are not connected to the electric grid. During the next 20 years, he warned, Pakistan's energy demand will increase by 350 percent, yet the percentage of its total energy needs met from indigenous sources will fall from 72 to 38 percent.
Ahmed said Pakistan must develop an integrated plan to combine energy imports with indigenous energy resources and develop programs emphasizing greater efficiency and management. No longer can Pakistan afford to consider renewable energy “a curiosity,” he said.
Pakistan’s government is considering projects that would tap its neighbors’ resources, such as importing natural gas from the Middle East and power from Central Asia. Pakistan’s long-range energy policy involves a shift from a predominantly state-controlled industry to one that gives the private sector a leading role.
Former Finance Minister of Pakistan Shahid Javed Burki said Pakistan should respond proactively to higher energy demands. He noted energy demand is high in the eastern parts of Pakistan while the western part possesses the majority of energy resources. Burki cautioned against aggravating existing regional conflicts by an inequitable sharing of the wealth generated from the resource-rich west.
Robert Looney of the Naval Postgraduate School described alternative investment scenarios that would, by 2035, dramatically alter Pakistan’s energy situation. Choices made today, he asserted, will influence whether Pakistan succeeds in generating high GDP growth rates a generation from now. Meanwhile, Bikash Pandey of Winrock International described alternative clean and renewable energy initiatives in rural areas across India, Bangladesh, Sri Lanka, and Nepal. He said Pakistan could learn from the successful projects of its neighbors.
Consultant Dorothy Lele said Pakistan should make social and human development central to Pakistan’s energy development. She stressed the significance of biomass, as it comprises 30 percent of total energy consumption in Pakistan and is the primary low-income household fuel. She questioned its neglect in commercial energy planning.
Pakistani businessman Asad Umar emphasized four roadblocks that prevent private enterprise from playing a larger role in the energy sector: the unstable political situation in the province of Baluchistan; the slow rate of deregulation and privatization; the political controversy and provincial disagreements associated with storage-based hydroelectric power generation projects; and overlapping responsibilities of the Private Power Investment Board and the National Electricity Power Regulatory Authority.
John Hammond of the U.S. Energy Association detailed some of the barriers to U.S. investment in Pakistan’s energy sector. He said American businesses tend to lack...