After merging the ministry of petroleum and natural resources and the power wing of the ministry of water and power to create the ministry of energy, the government is likely to merge the electricity and oil and gas regulators to create a single regulatory authority, an informed source said.
The creation of the ministry of energy was a big surprise on the day of the oath taking of the new federal cabinet. Premier Abassi directed the merger, as a first step towards ending the inter-corporate circular debt in the power sector that has ballooned over Rs 500 billion.
The government is under considerable pressure, from the international financial institutions to resolve the lingering issue of circular debt resulting from delay in the payment of dues by the state owned corporates in the power sector. Abassi had witnessed firsthand the poor payments mechanism of the DISCOs which have nearly brought the furnace oil and LNG importing state owned company, PSO on the verge of default, the source said.
The government is already working on plans to clip the powers of energy regulators, NEPRA and OGRA. The merger of both the regulators will help address many regulatory issues as well as result in curtailing powers of the regulator. The creation of the ministry of energy will help settle the issues by creating a single regulator, he added.
However, eminent energy expert Arshad Abassi said that merger of two ministries will not help improve the efficiency of the energy sector. He said that the creation of energy ministry means the government plans to rely more on furnace oil and LNG to meet the burgeoning energy demands.
Without developing the water sector for dams as well as power generation, he said adding there was no chance to bring down the energy prices to an affordable limit. The more reliance on thermal energy may lead to environmental challenges. It seems the government has no plans to develop big dams as it has not taken concrete steps to develop the sector.
On the other hand, the merger and bifurcation of a few ministries notified by the cabinet division, under directives of the new Prime Minister Shahid Khakan Abassi on Friday have confused the bureaucracy over the jurisdiction and rules of business issues, which they say may take a few weeks to settle.
The cabinet division of Friday notified creation of the ministry of energy by merging the ministry of petroleum and natural resources and power wing of the ministry of water and power. Similarly, the ministry of commerce and ministry of textile industry were merged.
A new ministry of water resources was created by bifurcation the water wing from the ministry of water and power. The ministry of postal services was created from the ministry of communications.
The cabinet division notification said the prime minister has constituted the new ministries and their constituent divisions under the provisions of Rule 3 of the Rules of Business 1973. Ministry of energy, with two constituent divisions namely power division and petroleum division.
The ministry of water resources with one constituent division, namely water resources division. The business of the existing division of water and power and petroleum and natural resources shall be distributed between the two new divisions accordingly.
The ministry of postal services, with one constituent division, namely postal services division. The business of the existing communications division to the extent of postal services shall be transferred to the new division while residual business shall remain with the existing communications division;
The ministry of commerce and textiles, with two constituent divisions, namely commerce division and textile division. The current business of the two existing divisions of commerce and textile industry shall be placed under the new ministry accordingly. Cabinet division shall take further action immediately to implement the prime minister’s orders.