CBS Newsletter
Winter 1995
pg. 3

Aerial view of Washington D.C.

News From the D.C. Office

Presidential Mission on Energy Investment in Pakistan

Secretary of Energy Hazel O'Leary led a presidential mission on energy investment in the Islamic Republic of Pakistan September 19-25, 1994. Stephen Wiel, who heads the Energy and Environment Division's Washington D.C. Project Office, participated in the mission. It was the first visit to Pakistan by a U.S. cabinet member for a nonmilitary purpose: to build economic bridges and an enhanced business relationship between the two countries.

Members of the mission were assigned to work on oil and natural gas, coal, rural development and renewables, energy efficiency and environment, and electricity (including generation, transmission, and distribution). Stephen Wiel chaired the energy efficiency and environment "pod."

Each group was to work with its Pakistani counterparts to agree on a list of desired outcomes and next-step action items. Throughout the week, groups met virtually nonstop with the Prime Minister's special assistant for energy, the Minister of Water and Power, the Minister of Petroleum and Natural Resources, and dozens of other Pakistani energy officials. The Prime Minister and the President were actively involved in several of the sessions.

The centerpiece of the week was a two-day Energy Conference in Lahore titled "Pakistan/U.S. Energy Partnerships: Benefits, Challenges and Opportunities." After a plenary session, breakout sessions in each technical area, and a state dinner, the Conference reconvened amidst fanfare and media attention to report on the results of the joint deliberations.

From an energy-efficiency perspective, the significant aspects of the trip were the Lahore conference, plugs for investment in end-use efficiency, and the mission's official report. Recognizing that raising capital was the primary focus of our Pakistani hosts, the working group focused on energy efficiency as the Government of Pakistan's best available mechanism for freeing capital from the energy-supply sector for other uses.

During the next 25 years the Government of Pakistan plans to add more than 50,000 MW of electric generating capacity. If through energy efficiency improvements it avoided 20% of this increased demand (about half the savings achieved in the past decade by New England Electric System in the U.S., for example), the Government of Pakistan would free approximately Rs.300 billion (U.S. $10 billion) of capital. This would shift the expected range of electricity-growth-rate to GDP-growth-rate ratio from the 1.0-to-1.5 range to the 0.8-to-1.2 range, offering significant relief from the electricity sector's contribution to the fiscal deficit.

Not only would electricity-sector efficiency increases effectively generate investment capital, they would bring two important collateral benefits: dramatic reduction in pollutant emissions; and improvement in the competitiveness of Pakistan's industries. Throughout the mission, these issues were conveyed to the President of Pakistan, the Prime Minister's special assistant on energy, the secretaries of several ministries, and the head of the primary national electric utility. The mission also focused attention on the need for utility DSM profitability. Surprisingly, no one the group encountered in Pakistan had previously heard of or thought about this concept. Making this profitability a part of Pakistan's power-sector privatization and restructuring through establishing a new regulatory agency, or simple tariff reform was the pod's number one recommendation, and it was well received by the Pakistani officials. The U.S. delegation promised a conference in Pakistan on this subject as the next step.

The group made other recommendations and attended other events during the week, including a visit to Tarbela dam and an unelectrified rural village, a roundtable strategy discussion with Pakistan's President, signings of private- sector business deals presided over by Secretary O'Leary and Prime Minister Bhutto (more than $3 billion and 2500 MW in new power plants "committed"), and the dedication of a new ENERCON (Pakistan's energy agency) building.

—Stephen Wiel with Jeff Harris

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Stephen Wiel
Environmental Energy Technologies Division
1250 Maryland Ave. SW, Suite 150
(202) 484-0880

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