Identifier
Created
Classification
Origin
08ISLAMABAD1734
2008-05-04 05:27:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Islamabad
Cable title:
NAVIGATING THE MAZE OF PAKISTANI ENERGY POLICY- PART THREE
how-toVZCZCXRO4938 RR RUEHLH RUEHPW DE RUEHIL #1734/01 1250527 ZNR UUUUU ZZH R 040527Z MAY 08 FM AMEMBASSY ISLAMABAD TO RUEHC/SECSTATE WASHDC 6769 INFO RUEATRS/DEPT OF TREASURY WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC RHEBAAA/DEPT OF ENERGY WASHDC RUEHRC/USDA FAS WASHDC 4209 RUEHNE/AMEMBASSY NEW DELHI 3199 RUEHLO/AMEMBASSY LONDON 7822 RUEHML/AMEMBASSY MANILA 2988 RUEHKP/AMCONSUL KARACHI 9651 RUEHLH/AMCONSUL LAHORE 5400 RUEHPW/AMCONSUL PESHAWAR 4137 RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL RHMFISS/CDR USCENTCOM MACDILL AFB FL
UNCLAS SECTION 01 OF 04 ISLAMABAD 001734
SIPDIS
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ENGY EFIN ECON EINV PREL PK
SUBJECT: NAVIGATING THE MAZE OF PAKISTANI ENERGY POLICY- PART THREE
REFS: A) Islamabad 00655 B) Islamabad 00810 C) Islamabad 00921 D)
Islamabad 01420 E) Karachi 199 F) Islamabad 01623 G) Islamabad 1701
UNCLAS SECTION 01 OF 04 ISLAMABAD 001734
SIPDIS
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ENGY EFIN ECON EINV PREL PK
SUBJECT: NAVIGATING THE MAZE OF PAKISTANI ENERGY POLICY- PART THREE
REFS: A) Islamabad 00655 B) Islamabad 00810 C) Islamabad 00921 D)
Islamabad 01420 E) Karachi 199 F) Islamabad 01623 G) Islamabad 1701
1. (U) Please see Action Request in paragraph 28.
2. (SBU) SUMMARY. Concluding the three part roadmap of agencies
involved in Pakistan's energy policy, this cable outlines the
involvement of the Prime Minister's Secretariat, four additional
Cabinet level Ministries, and five other regulatory agencies. The
U.S. has an opportunity to engage in diplomatic efforts which can
help shape the energy policy of Pakistan and streamline its
institutional framework, thereby transforming the energy sector and
improving the lives of millions of average Pakistani citizens.
Investment opportunities for American companies are abundant and
should be promoted. Continuing discussions under the bilateral
Energy Dialogue could be the first step in helping Pakistan address
these energy issues and Post renews requests for a date to be set
for the next discussion. END SUMMARY.
3. (SBU) This is the third piece of a three part cable review of the
haphazard mix of the institutions which comprise the energy policy
making sector of Pakistan. A lack of coordination and absence of
any clear line of authority hampers any formulation of policy
efforts to address the current energy crisis in Pakistan. This
cable is the seventh in a series of cables on Pakistan's energy
sector.
4. (SBU) Part one explained the Ministry of Water and Power and its
19 subordinate agencies. Part two in "Navigating the Energy Maze"
addressed the Ministry of Petroleum and National Resources and its
16 subordinate agencies. Part three addresses the other 4
Ministries and 7 subordinate agencies involved in various levels of
the GOP policy process.
--------------
PRIME MINISTER LEVEL
--------------
--------------
Task Force on Energy
--------------
5. (SBU) In November 2007 interim Prime Minister Soomro formed an
Energy Task Force to coordinate, plan and recommend measures for
Pakistan to deal with the current energy crisis. The task force is
headed by the Deputy Chairman of the Planning Commission and members
include the Secretary of the Ministry of Petroleum and Natural
Resources, the Secretary of the Ministry of Water and Power, the
Chairman of the Federal Board of Revenue and the Member of the
Planning Commission for Energy. The Task Force has recommended that
the Government develop plans to generate 20,000 MW electricity from
Thar Coal reserves in Balochistan by 2020. The Task Force also
recommended that President Musharraf seek Chinese assistance on the
development of the Thar coal fields during his April 2008 state
visit to Beijing.
6. (SBU) Following the February 2008 elections, a new cabinet has
been sworn into office and it is unclear whether the Task Force on
Energy will continue to exist under the new Government.
--------------
Special Energy Advisor to the Prime Minister
--------------
7. (SBU) Former Prime Minister Aziz created the position of Special
Advisor to the Prime Minster for Energy. With an office in the
Prime Minister's wing and reporting directly to Prime Minister Aziz,
this position was created to oversea the myriad of institutional
bodies and policies involved in energy. While serving as a member
of almost all energy-related Board of Directors for both the private
and public sector, this one man show was the driving force, or lack
thereof, for Pakistan's energy security efforts in the last five
years and also led the GOP efforts in the US-Pakistan Energy
Dialogue. The position was vacant under the caretaker government
and it is unclear whether this Advisor on Energy position will
continue to exist under the new Government.
-------------- --------------
VARIOUS OTHER MINISTRIES AND DEPARTMENTS INVOLVED WITH PAKISTAN'S
ISLAMABAD 00001734 002 OF 004
ENERGY SECTOR
-------------- --------------
8. (SBU) In addition to the Ministry of Water and Power and the
Ministry of Petroleum and Natural Resources, there are four
additional ministries which are involved in formulating and
approving energy policy decisions.
--------------
The Planning Commission
--------------
9. (SBU) While the Prime Minister serves as the Chairman of the
Planning Commission, this Ministry is essentially run by the Deputy
Chairman who is assisted by nine members including the Secretary of
the Planning Commission, the Chief Economist, the Director of
Pakistan's Institute of Development Economics, the Executive
Director of Implementation and Monitoring, and Members for Social
Sectors, Science and Technology, Energy, Infrastructure, and Food
and Agriculture. (Comment: While the Pakistani system used the term
"member" these officials are essentially the chief technocrats at
the level of Additional Secretaries. End Comment.)
10. (SBU) Within the Planning Commission, an Energy Wing is headed
by the Member for Energy and Infrastructure. The Commission drafted
a Medium Term Development Framework (2005-10) with a detailed Energy
Security Plan, analyzing the present energy crisis and making
projections for the future with specific development targets. As of
March 2008, essentially all of these projects have fallen
drastically behind schedule, despite active participation by the
Planning Commission on various boards of directors for most of the
power sector entities.
--------------
Ministry of Environment
--------------
11. (SBU) The Ministry of Environment is headed by a Minister with
a Federal Secretary running the administrative functions. It is
composed of five functional wings: Administration, Development,
Environment, International Cooperation and Forestry. Overlap occurs
due to the Ministry's control over specialized departments such as
the Energy Conservation Center (ENERCON),the Pakistan Forest
Institute, National Council for Conservation of Wildlife (NCCW) and
Zoological Survey Department (ZSD).
12. (SBU) In addition to the implementation of the National
Environment Policy, the Ministry also handles environmental
assessments and "no objection certifications" for power plant
operations. Power projects in both the public and private sector
are required to submit an Environmental Impact Assessment Report to
both the Provincial Environmental Protection Agencies and the
Ministry.
13. (SBU) Established in 1987, ENERCON serves as the national focal
point for energy conservation and energy efficiency activities.
ENERCON is mandated to increase the supply of energy by reducing
energy waste and improving efficiency, diversify the national
dependency on imported crude oil and refined petroleum products, and
promote clean energy technologies such as renewable energy.
14. (SBU) ENERCON is headed by a Managing Director and has a total
of 14 employees. This former USAID-funded project has drafted a
National Policy on Energy Conservation which has been approved by
the GOP. An Action Plan to implement the National Energy
Conservation Policy is now being formulated which will include
setting codes and standards for various energy consuming equipment.
--------------
Ministry of Privatization and Investment
--------------
15. (SBU) With Cabinet approval, the Privatization Commission (PC)
is entrusted with selling federal government property, such as GOP
shares in banks, industrial units, public utilities, oil and gas
companies, transport companies and infrastructure service providers
in an open and transparent manner. Within the overall GOP policy to
strengthen the private sector's role in the power supply, the
Ministry also makes independent recommendations on energy policies
ISLAMABAD 00001734 003 OF 004
to attract foreign direct investment into Pakistan. In addition to
the sale of shares or assets, the Ministry may also offer
concessions or the right to operate publicly owned assets. It is
headed by a political Minister, and had Cabinet status under the
previous government.
--------------
Ministry of Finance
--------------
16. (SBU) The Ministry of Finance (MOF) controls the purse strings
for all public sector projects, including power projects. In
addition, the MOF has financial advisors attached to each ministry
to maintain financial discipline. Funds are released to the public
sector power plants through the Ministry of Finance upon
recommendations of the Planning Commission. The MOF also works with
the private sector to promote public/private partnership in capital
intensive infrastructure projects.
17. (SBU) In most private sector projects, the GOP extends project
loans through a state company called the National Development
Finance Corporation (NDFC),the largest development finance
institution in Pakistan. NDFC provides financing to both public and
private sector industrial enterprises through its own deposits,
lines of credit from the State Bank of Pakistan and multilateral
credit agencies.
--------------
INDEPENDENT REGULATORY ORGANIZATIONS
--------------
18. (SBU) There are three independent regulatory agencies which
merit mention.
-------------- --------------
National Electric Power Regulatory Authority (NEPRA):
-------------- --------------
19. (SBU) In December 1997 the GOP established an autonomous
regulatory body, under the administrative control of the Cabinet, to
improve the efficiency and availability of electric power services.
The Prime Minister appoints a Chairman for a four year term to lead
NEPRA as well as Members to represent each of the four provinces.
With only 160 employees, NEPRA is responsible for the issuance of
licenses for the generation, transmission and distribution of
electric power; establishment and enforcement of standards to ensure
quality and operational safety and ensuring a consistent supply of
electric power to consumers; approval of investment and power
acquisition programs; and determination of all tariffs. By law,
NEPRA is required to hold public hearings on the proposed tariffs to
ensure transparency for investors and customers.
20. (SBU) NEPRA's inadequate and unqualified staff would make it
difficult to accomplish its mandate under any circumstances.
However, the tariff set by NEPRA is often rejected and altered
before being ratified by the government. Fearing popular fall-out,
the government attempts to reduce the impact on customers and pays
the difference between the actual cost of energy and the domestic
charge as a "direct subsidy" to the utility. Most of these payments
actually end up as receivables to WAPDA, which in turn reduces
payments to the independent power producers and thus to Pakistan
State Oil for fuel supplies. The two largest account receivables
owed to the distribution companies are from the Karachi Electric
Supply Company (reftel E) and the Pakistan Army.
--------------
Pakistan Atomic Energy Commission
--------------
21. (SBU) Under the purview of the Prime Minister's Secretariat,
the Pakistan Atomic Energy Commission (PAEC) is responsible for
implementation of the national nuclear power program. Currently two
nuclear power plants are operational - the 135 MW Karachi Nuclear
Power Plant (KANUPP) and the 325 MW Chashma Nuclear Power Plant
(CHASNUPP). A third plant, CHASNUPP unit 2, is under construction
and will be completed in 2011. The GOP has set a target of 8,800 MW
of nuclear power capacity by 2030.
22. (SBU) PAEC management consists of federally appointed members
ISLAMABAD 00001734 004 OF 004
from government and scientific fields. It meets four times per year
to deal with all atomic issues including research work, promotion of
peaceful uses of atomic energy in the fields of agriculture,
medicine and industry, and the development of nuclear power
generation projects.
--------------
Sarhad Hydel Development Organization
--------------
23. (SBU) Longstanding conflicts between provincial and federal
rights over hydropower potential led to the establishment of the
Sarhad Hydel Development Organization (SHYDO). As an autonomous
body mandated to explore and develop the hydropower potential in the
North West Frontier Province (NWFP),SHYDO conducts feasibility
studies for hydropower generation in the province and regulates
private sector investment in hydropower projects.
24. (SBU) An eight member Board of Directors under the chairmanship
of the NWFP Governor governs SHYDO. Board members include
provincial policy makers including the Ministers and Secretaries for
Power and Finance, the NWFP Additional Secretary, the Secretary of
Law and the SHYDO Managing Director. SHYDO's head office is in
Peshawar with field offices in Chitral, Dir, Swat and Kohistan.
--------------
Comment
--------------
25. (SBU) Comment: With a total of six Ministries and 42 agencies
involved, there is an obvious need to reassess the usefulness of
these organizations and eliminate duplication of responsibilities.
Pakistan's electricity supply has almost always lagged behind
demand. Unfortunately, the demand for electricity was not a
priority of the previous government until it was too late to
increase supply to even remotely keep up with demand.
26. (SBU) Comment continued: While many proposals exist for
creating new power generation, turf wars for operational control
among the Ministries and agencies have seriously slowed or
completely halted the approval processes. High level decisions have
been further complicated by the capital intensive nature of big
infrastructure projects, concerns over political backlash between
provinces, officials' not unreasonable fears of being second guessed
and accused of large scale corruption by subsequent governments and
the long term nature of power projects to achieve tangible results.
Timely decisions were not taken to utilize all available resources
and no agency or ministry has the lead on implementing the National
Energy Strategy.
27. (SBU) Comment continued: The good news is that the new
coalition government is making energy policy and dealing with the
current energy shortfalls a priority. When the Pakistan Peoples
Party (PPP) was last in power, Pakistan had a track record of
encouraging domestic and foreign investment in its energy sector.
The last additions to the national grid were completed in 2000, a
result of projects implemented by former Prime Minister Benazir
Bhutto in 1994. No additional mega-watts have been added to the
national grid since 2000. With the public outcry increasing, the
new government will need to make some quick decisions to begin
addressing the long term energy problems, but shortfalls will
continue in the immediate future. The lack of new generation
capacity will continue to dampen prospects for economic growth for
years to come.
28. (SBU) Comment continued: The U.S. has an opportunity to engage
in diplomatic efforts which can help shape the energy policy of
Pakistan and improve the lives of millions of average Pakistani
citizens. Efforts to help Pakistan streamline its institutional
framework and policy process could transform the energy sector.
Investment opportunities for American companies are abundant and
should be promoted. Continuing discussions under the bilateral
Energy Dialogue could be the first step in helping Pakistan address
these energy issues and Post renews requests for a date to be set
for the next discussion. End Comment.
PATTERSON
SIPDIS
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ENGY EFIN ECON EINV PREL PK
SUBJECT: NAVIGATING THE MAZE OF PAKISTANI ENERGY POLICY- PART THREE
REFS: A) Islamabad 00655 B) Islamabad 00810 C) Islamabad 00921 D)
Islamabad 01420 E) Karachi 199 F) Islamabad 01623 G) Islamabad 1701
1. (U) Please see Action Request in paragraph 28.
2. (SBU) SUMMARY. Concluding the three part roadmap of agencies
involved in Pakistan's energy policy, this cable outlines the
involvement of the Prime Minister's Secretariat, four additional
Cabinet level Ministries, and five other regulatory agencies. The
U.S. has an opportunity to engage in diplomatic efforts which can
help shape the energy policy of Pakistan and streamline its
institutional framework, thereby transforming the energy sector and
improving the lives of millions of average Pakistani citizens.
Investment opportunities for American companies are abundant and
should be promoted. Continuing discussions under the bilateral
Energy Dialogue could be the first step in helping Pakistan address
these energy issues and Post renews requests for a date to be set
for the next discussion. END SUMMARY.
3. (SBU) This is the third piece of a three part cable review of the
haphazard mix of the institutions which comprise the energy policy
making sector of Pakistan. A lack of coordination and absence of
any clear line of authority hampers any formulation of policy
efforts to address the current energy crisis in Pakistan. This
cable is the seventh in a series of cables on Pakistan's energy
sector.
4. (SBU) Part one explained the Ministry of Water and Power and its
19 subordinate agencies. Part two in "Navigating the Energy Maze"
addressed the Ministry of Petroleum and National Resources and its
16 subordinate agencies. Part three addresses the other 4
Ministries and 7 subordinate agencies involved in various levels of
the GOP policy process.
--------------
PRIME MINISTER LEVEL
--------------
--------------
Task Force on Energy
--------------
5. (SBU) In November 2007 interim Prime Minister Soomro formed an
Energy Task Force to coordinate, plan and recommend measures for
Pakistan to deal with the current energy crisis. The task force is
headed by the Deputy Chairman of the Planning Commission and members
include the Secretary of the Ministry of Petroleum and Natural
Resources, the Secretary of the Ministry of Water and Power, the
Chairman of the Federal Board of Revenue and the Member of the
Planning Commission for Energy. The Task Force has recommended that
the Government develop plans to generate 20,000 MW electricity from
Thar Coal reserves in Balochistan by 2020. The Task Force also
recommended that President Musharraf seek Chinese assistance on the
development of the Thar coal fields during his April 2008 state
visit to Beijing.
6. (SBU) Following the February 2008 elections, a new cabinet has
been sworn into office and it is unclear whether the Task Force on
Energy will continue to exist under the new Government.
--------------
Special Energy Advisor to the Prime Minister
--------------
7. (SBU) Former Prime Minister Aziz created the position of Special
Advisor to the Prime Minster for Energy. With an office in the
Prime Minister's wing and reporting directly to Prime Minister Aziz,
this position was created to oversea the myriad of institutional
bodies and policies involved in energy. While serving as a member
of almost all energy-related Board of Directors for both the private
and public sector, this one man show was the driving force, or lack
thereof, for Pakistan's energy security efforts in the last five
years and also led the GOP efforts in the US-Pakistan Energy
Dialogue. The position was vacant under the caretaker government
and it is unclear whether this Advisor on Energy position will
continue to exist under the new Government.
-------------- --------------
VARIOUS OTHER MINISTRIES AND DEPARTMENTS INVOLVED WITH PAKISTAN'S
ISLAMABAD 00001734 002 OF 004
ENERGY SECTOR
-------------- --------------
8. (SBU) In addition to the Ministry of Water and Power and the
Ministry of Petroleum and Natural Resources, there are four
additional ministries which are involved in formulating and
approving energy policy decisions.
--------------
The Planning Commission
--------------
9. (SBU) While the Prime Minister serves as the Chairman of the
Planning Commission, this Ministry is essentially run by the Deputy
Chairman who is assisted by nine members including the Secretary of
the Planning Commission, the Chief Economist, the Director of
Pakistan's Institute of Development Economics, the Executive
Director of Implementation and Monitoring, and Members for Social
Sectors, Science and Technology, Energy, Infrastructure, and Food
and Agriculture. (Comment: While the Pakistani system used the term
"member" these officials are essentially the chief technocrats at
the level of Additional Secretaries. End Comment.)
10. (SBU) Within the Planning Commission, an Energy Wing is headed
by the Member for Energy and Infrastructure. The Commission drafted
a Medium Term Development Framework (2005-10) with a detailed Energy
Security Plan, analyzing the present energy crisis and making
projections for the future with specific development targets. As of
March 2008, essentially all of these projects have fallen
drastically behind schedule, despite active participation by the
Planning Commission on various boards of directors for most of the
power sector entities.
--------------
Ministry of Environment
--------------
11. (SBU) The Ministry of Environment is headed by a Minister with
a Federal Secretary running the administrative functions. It is
composed of five functional wings: Administration, Development,
Environment, International Cooperation and Forestry. Overlap occurs
due to the Ministry's control over specialized departments such as
the Energy Conservation Center (ENERCON),the Pakistan Forest
Institute, National Council for Conservation of Wildlife (NCCW) and
Zoological Survey Department (ZSD).
12. (SBU) In addition to the implementation of the National
Environment Policy, the Ministry also handles environmental
assessments and "no objection certifications" for power plant
operations. Power projects in both the public and private sector
are required to submit an Environmental Impact Assessment Report to
both the Provincial Environmental Protection Agencies and the
Ministry.
13. (SBU) Established in 1987, ENERCON serves as the national focal
point for energy conservation and energy efficiency activities.
ENERCON is mandated to increase the supply of energy by reducing
energy waste and improving efficiency, diversify the national
dependency on imported crude oil and refined petroleum products, and
promote clean energy technologies such as renewable energy.
14. (SBU) ENERCON is headed by a Managing Director and has a total
of 14 employees. This former USAID-funded project has drafted a
National Policy on Energy Conservation which has been approved by
the GOP. An Action Plan to implement the National Energy
Conservation Policy is now being formulated which will include
setting codes and standards for various energy consuming equipment.
--------------
Ministry of Privatization and Investment
--------------
15. (SBU) With Cabinet approval, the Privatization Commission (PC)
is entrusted with selling federal government property, such as GOP
shares in banks, industrial units, public utilities, oil and gas
companies, transport companies and infrastructure service providers
in an open and transparent manner. Within the overall GOP policy to
strengthen the private sector's role in the power supply, the
Ministry also makes independent recommendations on energy policies
ISLAMABAD 00001734 003 OF 004
to attract foreign direct investment into Pakistan. In addition to
the sale of shares or assets, the Ministry may also offer
concessions or the right to operate publicly owned assets. It is
headed by a political Minister, and had Cabinet status under the
previous government.
--------------
Ministry of Finance
--------------
16. (SBU) The Ministry of Finance (MOF) controls the purse strings
for all public sector projects, including power projects. In
addition, the MOF has financial advisors attached to each ministry
to maintain financial discipline. Funds are released to the public
sector power plants through the Ministry of Finance upon
recommendations of the Planning Commission. The MOF also works with
the private sector to promote public/private partnership in capital
intensive infrastructure projects.
17. (SBU) In most private sector projects, the GOP extends project
loans through a state company called the National Development
Finance Corporation (NDFC),the largest development finance
institution in Pakistan. NDFC provides financing to both public and
private sector industrial enterprises through its own deposits,
lines of credit from the State Bank of Pakistan and multilateral
credit agencies.
--------------
INDEPENDENT REGULATORY ORGANIZATIONS
--------------
18. (SBU) There are three independent regulatory agencies which
merit mention.
-------------- --------------
National Electric Power Regulatory Authority (NEPRA):
-------------- --------------
19. (SBU) In December 1997 the GOP established an autonomous
regulatory body, under the administrative control of the Cabinet, to
improve the efficiency and availability of electric power services.
The Prime Minister appoints a Chairman for a four year term to lead
NEPRA as well as Members to represent each of the four provinces.
With only 160 employees, NEPRA is responsible for the issuance of
licenses for the generation, transmission and distribution of
electric power; establishment and enforcement of standards to ensure
quality and operational safety and ensuring a consistent supply of
electric power to consumers; approval of investment and power
acquisition programs; and determination of all tariffs. By law,
NEPRA is required to hold public hearings on the proposed tariffs to
ensure transparency for investors and customers.
20. (SBU) NEPRA's inadequate and unqualified staff would make it
difficult to accomplish its mandate under any circumstances.
However, the tariff set by NEPRA is often rejected and altered
before being ratified by the government. Fearing popular fall-out,
the government attempts to reduce the impact on customers and pays
the difference between the actual cost of energy and the domestic
charge as a "direct subsidy" to the utility. Most of these payments
actually end up as receivables to WAPDA, which in turn reduces
payments to the independent power producers and thus to Pakistan
State Oil for fuel supplies. The two largest account receivables
owed to the distribution companies are from the Karachi Electric
Supply Company (reftel E) and the Pakistan Army.
--------------
Pakistan Atomic Energy Commission
--------------
21. (SBU) Under the purview of the Prime Minister's Secretariat,
the Pakistan Atomic Energy Commission (PAEC) is responsible for
implementation of the national nuclear power program. Currently two
nuclear power plants are operational - the 135 MW Karachi Nuclear
Power Plant (KANUPP) and the 325 MW Chashma Nuclear Power Plant
(CHASNUPP). A third plant, CHASNUPP unit 2, is under construction
and will be completed in 2011. The GOP has set a target of 8,800 MW
of nuclear power capacity by 2030.
22. (SBU) PAEC management consists of federally appointed members
ISLAMABAD 00001734 004 OF 004
from government and scientific fields. It meets four times per year
to deal with all atomic issues including research work, promotion of
peaceful uses of atomic energy in the fields of agriculture,
medicine and industry, and the development of nuclear power
generation projects.
--------------
Sarhad Hydel Development Organization
--------------
23. (SBU) Longstanding conflicts between provincial and federal
rights over hydropower potential led to the establishment of the
Sarhad Hydel Development Organization (SHYDO). As an autonomous
body mandated to explore and develop the hydropower potential in the
North West Frontier Province (NWFP),SHYDO conducts feasibility
studies for hydropower generation in the province and regulates
private sector investment in hydropower projects.
24. (SBU) An eight member Board of Directors under the chairmanship
of the NWFP Governor governs SHYDO. Board members include
provincial policy makers including the Ministers and Secretaries for
Power and Finance, the NWFP Additional Secretary, the Secretary of
Law and the SHYDO Managing Director. SHYDO's head office is in
Peshawar with field offices in Chitral, Dir, Swat and Kohistan.
--------------
Comment
--------------
25. (SBU) Comment: With a total of six Ministries and 42 agencies
involved, there is an obvious need to reassess the usefulness of
these organizations and eliminate duplication of responsibilities.
Pakistan's electricity supply has almost always lagged behind
demand. Unfortunately, the demand for electricity was not a
priority of the previous government until it was too late to
increase supply to even remotely keep up with demand.
26. (SBU) Comment continued: While many proposals exist for
creating new power generation, turf wars for operational control
among the Ministries and agencies have seriously slowed or
completely halted the approval processes. High level decisions have
been further complicated by the capital intensive nature of big
infrastructure projects, concerns over political backlash between
provinces, officials' not unreasonable fears of being second guessed
and accused of large scale corruption by subsequent governments and
the long term nature of power projects to achieve tangible results.
Timely decisions were not taken to utilize all available resources
and no agency or ministry has the lead on implementing the National
Energy Strategy.
27. (SBU) Comment continued: The good news is that the new
coalition government is making energy policy and dealing with the
current energy shortfalls a priority. When the Pakistan Peoples
Party (PPP) was last in power, Pakistan had a track record of
encouraging domestic and foreign investment in its energy sector.
The last additions to the national grid were completed in 2000, a
result of projects implemented by former Prime Minister Benazir
Bhutto in 1994. No additional mega-watts have been added to the
national grid since 2000. With the public outcry increasing, the
new government will need to make some quick decisions to begin
addressing the long term energy problems, but shortfalls will
continue in the immediate future. The lack of new generation
capacity will continue to dampen prospects for economic growth for
years to come.
28. (SBU) Comment continued: The U.S. has an opportunity to engage
in diplomatic efforts which can help shape the energy policy of
Pakistan and improve the lives of millions of average Pakistani
citizens. Efforts to help Pakistan streamline its institutional
framework and policy process could transform the energy sector.
Investment opportunities for American companies are abundant and
should be promoted. Continuing discussions under the bilateral
Energy Dialogue could be the first step in helping Pakistan address
these energy issues and Post renews requests for a date to be set
for the next discussion. End Comment.
PATTERSON