Control Zenith of Capitalism Energy Politics and

Control & Zenith of Capitalism: Energy Politics and Economic Impact By Ghalib Ata Instructor of Development Management, IAS, PU, Convener Think Tanks - PEF Ex-Director R&D, LCCI, University of the Punjab January 5, 2012

Capitalism: Background n 16 th to 17 th Century People Vs State-Church n Policy of Taxation n Renunciation of Religion n Compromise n Don’t leave Religion n Separation of Religion from State n Higher ideals will come from “People’s Consensus” n Difficult to ask from everyone ask from “Representative” – Beginning of Modern Democracy

Capitalism: Four Basic Freedoms (Cont …) n Higher Ideals n n Freedom of Faith Freedom of Expression Personal Freedom of Ownership § The greatest Problem: Scarce resources to meet unlimited desires of people n n Real problem is creation of wealth to remove scarcity of resources Tools of Creation of Wealth n n n Banks Leasing Companies Stock Exchange

Capitalism: Four Basic Freedoms (Cont …) n Tools of Creation of Wealth n Banks n Leasing Companies n Stock Exchange n Develop Multi-national Companies n Every Large Company to have unabated supply of resources n Biggest Resource of Every Company is: n ENERGY

Distribution of Energy Sources Oil Proved reserves at end 2009 Thousand million barrels Total Middle East 742. 7 61. 5% 79. 5 Total Europe & Eurasia 144. 4 12. 0% 22. 5 Total Africa 117. 2 9. 7% 32. 1 Total S. & Cent. America 103. 5 8. 6% 41. 2 5. 0% 12. 0 Total North America 59. 9 Share of total R/P ratio Source: BP Statistical Review of World Energy for UN • US R/P Ratio is 12 years • Iran 11. 4%, Kazakhstan 3. 3%, Russian Federation 6. 6%

Population Vs Consumption Pattern of Oil 1. Oil Consumption Volume % of World Population Ranking Country Name Million tonnes oil equivalent 2009 World Share Total 19. 79% China 349. 8 9% 17. 52% India 120. 3 3. 1% 4. 54% USA 842. 9 21. 7% 2. 41% Pakistan 18. 4 0. 5% 2. 14% Russian Federation 128. 5 3. 3% 1. 91% Japan 235 6% Source: BP Statistical Review of World Energy for UN • US consumes 21. 7% of world’s oil consumption • China is 5 times bigger than US consumes only 9% of world’s oil consumption • Japan is less than 2% of world population consumes 6% of world’s consumption

Distribution of Energy Sources Natural Gas at end 2009 Trillion cubic metres Share of total R/P Ratio Total Middle East 73. 47 40. 5% > 100 Yrs Total Europe & Eurasia 64. 13 35. 3% 59. 8 Total Asia Pacific 14. 82 8. 2% 39. 3 Total Africa 14. 18 7. 8% 78. 6 Total North America 7. 98 4. 4% 10. 6 Proved reserves Source: BP Statistical Review of World Energy for UN • Iran 16%, • Russian Federation 26% • US R/P Ratio 11 Years

Population Vs Consumption Pattern of Natural Gas 2. Natural Gas Consumption Volume % of World Population Ranking Country Name Million tonnes oil equivalent 2009 share of total 19. 79% China 50 1. 9% 17. 52% India 35. 8 1. 4% 4. 54% USA 588. 7 22. 2% 2. 41% Pakistan 27. 6 1. 1% 2. 14% Russian Federation 388. 9 15. 1% 1. 91% Japan 76. 1 3% • US is responsible 22% of world’s gas consumption • China is 5 times bigger than US & consumes only 2% of world’s gas consumption • Japan is less than 2% of world population consumes 6% of world’s consumption

Seven Sisters n Rockefellers n Huge Oil Monopoly: Standard Oil n n Governments Toppled 1911 Regulatory Action n n Broken into Smaller companies Maintained shares of all n 1945 Enrico Mattei: Italian Minster for Petroleum n Seven Dogs – Italian Cat – Iranian Oil n First time 70% of oil produce to natives n Murdered in Plane Crash

Seven Sisters n Cheveron n Exxon. Mobil n Shell n British Pet n Standard Oil n Unocal n Dick Cheney, Condelisa Rice, Bush, Hamid Karzai

Theory of Counter Insurgency n Joint vs. an Ant n Create Deception n Iraq WMDs n 9/11 Falsehood n Talks Broke down between US Energy Companies

First Century Routes 12

Roman Trade with India 13

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Gawadar: Chinese Pearl in Indian Ocean 16

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Location of Minerals in Pakistan Minerals Ruby Emeralds Pink Topaz Aquamarine Peridot Kashmir Ruby Gold Aluminium Iron ore Copper Zinc Location of Deposits Hunza, Neelam, & Upper Hunza Swat, Gilgit, Mehmund, & Bajour Mardan Eastern Gilgit & Chitral Kohistan Neelam Valley Saindak & Reko Diq Muzaffarabad, Ziarat, Kalat, & Khushabad Kalabagh, Nakkundi, & Dilband Saindak & Reko Diq Lasbela, Khuzdar Coal Thar, Lakhra, Ziarat, Salt Range, Thatta, & Orakzai, etc. 18

Precious Stones Value of Finished Goods in Proven Reserves Price / Carat Reserves in Million Carats Ruby 500 1. 5 750 Emeralds 75 70 5250 Pink Topaz 45 9 405 Aquamarine 45 0. 2 9 Peridot 39 10 390 Kashmir Ruby 500 125 62500 Total Value in Million $ International Market Million $ 69, 304 693, 040 19

Metals & Coal Reserves Proven Reserves Price/Ounce million ounce 1100 9 Per Ton Million Tons 2243 74 165, 982 Iron ore 76 903. 4 68, 658. 4 Copper 680 1882. 5 1, 280, 100 Zinc 130 23. 72 3, 083. 6 Coal 65 185000 Gold Aluminum Total Value Million $ 9, 900 12, 025, 000 13, 552, 724 20

Coal in Electricity Generation South Africa 94% India 68% Poland 93% Czech Rep 62% PR China 81% Morocco 57% Australia 76% Greece 55% Israel 71% USA 49% Kazakhstan 70% Germany 49% Source: IEA 2009

Current Issues Energy Related Issues n Power Shortfall ( 2000 MW to 5000 MW) n Gas reserves to last 2025 (Govt Official Stance) n Gas available to Industry only 3 days/week n CNG Stations Shutdown for 3 days/week n Electricity load shedding in summers n Cities: 8 to 12 hours n Villages: 12 to 18 hours n Water shortage 1700 (1990) today 1000 cubic meter/capita Results n n n High Energy Prices High cost of Input Global Competitiveness (Pakistan Ranked 101) 22

Business Process Inputs Equipment Raw Mt Utilities HR Land Organization Process Outputs Goods/ Services Tax Annual on surplus income

Before 1990 Inputs Equipment Raw Mt Utilities HR Land Sub-total $E $ RM $U $ HR $L $ IP Organization Process $ P Input $ IP Sub-Total $ P+IP Outputs Goods/ $ P+IP Services Profit $ Pr S-Total $ P+IP+Pr Tax $T Total = $ P+IP+Pr+T

After 1990 Inputs Equipment Raw Mt Utilities HR Land Sub-total Organization $ E+15% ST Process $ P $ RM+15% ST Input $ IP $ U+15% ST Sub-Total $ P+EIP $ HR+15% ST $ L > Expensive $ EIP Imports $ Income Tax Outputs Goods/ $ P+EIP Services Profit $ Pr S-Total $ P+EIP+Pr Tax $T Total = $ P+EIP+Pr+T

After 1990 Inputs Equipment Raw Mt Utilities HR Land Sub-total Organization $ E+15% ST Process $ P $ RM+15% ST Input $ IP $ U+15% ST Sub-Total $ P+EIP $ HR+15% ST $ L > Expensive $ EIP Organization Imports $ 2. 5 Income Tax Operating Capital Required $ + (Riba) Cost of Loan Bank + Financial Institutions Outputs Goods/ $ P+EIP Services Profit $ Pr S-Total $ P+IP+Pr Tax $T Total = $ P+EIP+Pr+T

After 1990 Inputs Equipment Raw Mt Utilities HR Land Sub-total Organization $ E+ 15% ST Process $ P $ RM+ 15% ST Input $ IP $ U+ 15% ST Sub-Total $ P+EIP $ HR+ 15% ST $ L > Expensive $ EIP Outputs Goods/ $ P+EIP Services Profit $ Pr S-Total $ P+IP+Pr Tax $T Total = $ P+EIP+Pr+T Organization Imports $ 2. 5 Income Tax Operating Capital Required Customer $ + (Riba) Cost of Loan Bank + Financial Institutions

Startling Facts Petrol Price in 1990 was Rs. 7. 00/liter n n Today? Wheat Flour Price Rs 3. 25/kilo in 1990 n n Today ? Trade Deficit 1990 $ 1. 48 Billion n n Today ? Suicides in 1990 less than 100 recorded n n Today ? 28

Question What changed in last 20 Years?

Govt. Revenues and Subsidies Since 1980 in Electricity and Gas

Problem of Ownership – Wrath of Capitalism n Answer from Communism n State-Ownership n Answer from Capitalism n Private-Ownership n Answer from Islam n Three types of Ownerships n Collective n State n Private

Turkman-China Pipeline 20 Billion CM Done Another 20 Billion CM Pipeline till end 2010 n P ta kis a 32

China – Russia New Entries to Capitalism n Purchase of US Federal Bonds n China $ 1. 4 trillion n Russia $ 700 billion n China and Russia have stakes in US Economy n Last year fear of meltdown in US Economy forced following changes: Alternate currency n Breaking hegemony on energy fields and trade routes n

Nord Stream

South Stream

Issues and Solutions n Energy – Collective ownership no profiteering n Mineral resources - Collective ownership no profiteering n Primary industry – Collective ownership n Concentration of wealth in few hands – Prohibited n Currency – Gold/Silver or Gold/Silver Based n Taxation – based on Islamic – From Rich to Poor n Housing State Responsibility

Accept the Fact that Human Beings Cannot Make Law

Divine Law is the Solution

Thank You

New Water Major Reservoirs Water Storage Bhasha Dam Kalabagh Dam Proposed Pakistan Dam Total Increase in Capacity Live Storage 6. 4 MAF 6. 1 MAF 12. 5 MAF Gross Storage 8. 1 MAF 7. 9 MAF 16 MAF WAPDA Documents 2010 -Bhasha Dam is Recover of 5 MAF of lost Storage Capacity -Only 1 MAF will be add - Kalabagh Dam to add 6 MAF of storage capacity

Impact of Disintegration of Soviet Union n Kissinger and Brizinski n Stop the Reemergence of Soviet Union n n By entering Central Asian States Reduce dependence of Central Asian States on Moscow Create alternate Energy Market for Caspian Sea fossil fuel Stop the Reemergence of Political Islam n n n Denuclearize Pakistan By entering Afghanistan Deception – Constructive Chaos – Counter Insurgency

Potential n Hydro Power Potential n Exploited power potential 46000 -50000 MW 6474 MW n Coal Power Potential n 1, 85, 000 Million Tons n Coal Imports are higher n than local extraction Enough for 500 Years n Gold/Copper Reserves n Total External Debt More than $ 500 Billions Worth $ 9 Trillion $ 51. 5 Billion n 42