The neglected institutional aspect of energy policies in Pakistan

Starting with the 1994 private power policy, Pakistan has seen a streak of energy policies, introduced at regular intervals by successive governments in their bid to fuel the growing economy and serve the demands of the burgeoning population. Most of these policies, however, failed to deliver their intended outcomes during implementation. Often, these policies have also led to serious unintended consequences such as excess capacity, suppressed demand, piling up of circular debt, relocating of local businesses to other countries, and raising fuel and electricity prices beyond the reach of common citizens.

Multiple factors may have contributed to the failure or lackluster performance of these policies, but a critical and often neglected factor has been the lack of supportive institutional capacity on ground that was requisite for their efficient and effective performance. As new energy policies are currently in the offing, our policy makers must assess upfront the compatibility of our existing institutions with the new demands these policies will impose on them and ensure that people and systems there are sufficiently capable of performing their new roles and responsibilities.

Public sector policies, prior to their implementation, are generally filtered through a four-pronged evaluation criteria: (i) their effectiveness in achieving the intended objectives; (ii) their efficiency in delivering the designed benefits with respect to their implementation costs; (iii) their equity in distribution of costs and benefits across different stakeholders; and (iv) the feasibility and compatibility of existing institutions for their efficient and effective implementation.

It is difficult to comment whether the past energy policies, before their introduction, were screened through these lenses or not, but considerable evidence exists to suggest that the compatibility of the existing institutions with the demands of the new policies was either ignored or not given a serious consideration. Not infrequently, the capacity of public sector institutions entrusted with the implementation of the new policies proved inadequate, and often at odds with what was actually required for successful performance of these policies.

Deficiencies in the design of these policies and corrupt practices during their implementation are often cited as the two main reasons for their failure. There is arguably some truth to this viewpoint, but lack of compatibility of the existing institutions for effective implementation of the new policies has also been an important factor behind their failure or poor performance.

The past energy policies were designed, most of the time, without any active or meaningful participation of the implementing entities. Even after their enforcement, these entities were not properly communicated about the objectives of these policies and what exactly was expected of them during the implementation process. This led to not just a gap between what was being asked and what could actually be delivered but also to lack of ownership and motivation during the implementation stages.

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