Impact of the 18th Amendment on Energy Security and Governance Parameters in Energy Sector of Pakistan

Abstract

The study aims to check the impact of decentralization on the performance of energy supply sector in Pakistan. The energy supply in Pakistan is fairly diversified including oil (35%), natural gas (43%), coal (7%) and electricity (13%). Although both public and private agencies are involved in the energy supply however, the role of public sector is dominant. The government either controlled energy supply or regulate the private energy suppliers. In 2010, the parliament passed the 18th Constitutional Amendment to devolve many roles from the federal government to the provincial governments. This Amendment does not directly affect the energy sector nevertheless, it altered the energy scenario by modifying the Article 157, 161 and 172 of the Constitution. This study carries out an impact assessment by taking data for the years 2004-05, 2009-10 and 2014-15. The analysis is carried out using four performance indicators including exploration, production, consumption shares and consumer mix of given energy source. The results show that 18th Amendment change the provincial shares in exploration and production of oil and natural gas significantly. This change in the shares can be partially explained by competition. The cumulative natural gas reserves showing exploration level and the gas production has decreased during the period 2005-2015. Moreover, the consumption of natural gas is inclined more towards transport and residential sectors especially in the producing provinces. The share of natural gas consumption in power sector is adversely affected with a 27% decline. Resultantly, share of oil in the power generation has increased significantly. It has serious financial consequences for the public electric utility that faces recurrent circular debts. The unavailability of domestic natural gas for the power generation and industrial sectors drives these sectors to rely on imported LNG which raises their production costs.