Fiscal devolution and energy sector performance in Pakistan

Faisal Jamil and Fawad Khan ()
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Fawad Khan: National University of Sciences & Technology (NUST), Islamabad

Economics Bulletin, 2021, vol. 41, issue 3, 1747-1762

Abstract: Devolution reforms agenda was approved by the parliament in Pakistan through enactment of 18th Constitutional Amendment in 2010. Pakistan is a federation comprising of four provinces. The amendment aspired decentralization of fiscal powers to the provinces from federal government and considerably changed the structure of the public sector. This study examines the impact of decentralization on the performance of the energy sector through examining indicators relevant to energy systems in the country. We analyse data on key performance indicators of natural gas, oil and electricity sectors in the pre- and post-amendment periods. More specifically, the devolution reforms change the provincial shares in exploration and production of oil and natural gas that can be attributable to increased competition and governance among the provinces. The devolution adversely affected the supply of natural gas by making the gas allocation policy redundant especially limiting the gas allocation to power sector raising the fuel oil and LNG imports by the public and private power producers. It has serious fiscal consequences for energy sector that is already facing recurrent circular debt.

Keywords: Constitutional amendment; natural gas; devolution reforms; performance indicators; Pakistan (search for similar items in EconPapers)
JEL-codes: H3 H7 (search for similar items in EconPapers)
Date: 2021-09-17
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