China has recently decided to invest $46 billion in Pakistan to build roads infrastructure and other development projects, but there is a long history of the United States assistance to the country both at the time of peace and war. However, the US assistance has always been looked upon with suspicion regardless to its billions of dollars annual budget. The problem is that the United States wants to help Pakistan in the areas of its own interests and leaves the country in lurch after achieving its goals. According to newspaper reports, the US government is negotiating with Islamabad to develop energy sector and create an investment-friendly environment in the country by introducing market-based reforms and facilitate private investment in the energy projects.
The US government has decided to concentrate on five institutions having a great influence on the private investments in the power sector. The institutions are Private Power and Infrastructure Board, Alternative Energy Development Board, National Electric Power Regulatory Authority, National Transmission and Dispatch Company Limited and Privatisation Commission. The US assistance is aimed at improving capacity building of the institutions to speed up the project approvals, get power generation licences as well as pricing guidelines, prepare development plans of transmission network and take other steps to simplify the procedural barriers faced by power project developers. The reports so far claim that the US assistance has helped Pakistan in adding more than 1.5 gigawatts of electricity to the national grid during the last five years. The assistance concentrated in refurbishing existing hydropower and thermal generation facilities, completing new hydropower projects and improving the operation and efficiency of the national grid of the country. The country has been suffering chronic energy crisis for the last three decades and it is expected that the current energy demand will be doubled by 2030 due ever increasing industrial base in the country. The country has so far discovered meager oil and gas resources, but under-investment has hampered further exploration in the locations believed to be filled with oil and gas reserves.
The newspaper reports suggest that the United States has proposed a new framework for US-Pakistan cooperation in the energy sector. Under the proposed framework, the United States will determine its future bilateral assistance on supporting the Islamabad’s efforts to implement market-based reforms necessary to facilitate and accelerate private investment in the country. Most of the assistance is extended through the USAID’s Development Credit Authority which is a legislative authority that permits US assistance to issue partial loan guarantees to private lenders. It is hoped that the United States will change its policy and will act as a friend not as a master.