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Informative Dowloadable Reports prepared by Energy Engineers Network:

  

Pakistan Energy Market Data – October 2019

Why Nations Buy LNG

Energy Projects of CPEC

Kara Korum Highway – CPEC

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Corporate Sustainability Brief

Do well while Doing Good


Do well means – Maximizing Share holders value

Doing good means – Maximizing benefit for society and environment

Energy business is getting more and more competitive by each passing day, with additional requirements for socially and environmentally responsible behavior. Various business models that can be adopted to keep the balance between sustainability and shareholders profits are:

  • Cost Cutting Business Model
  • Price Increase Business Model
  • Capturing Additional Market Share Business Model
  • Changing Line of Business Model
  • Protecting Brand through Improved Public Image Business Model

S-Curve provides the industry framework from start of business to maturity. Mature industries can face market disruption risk due to technology changes and emerging business models that better satisfy new societal needs. At this point companies need to jump the S-Curve to remain relevant in the market – digital camera disrupted photographic film production.

Traditionally, industries took natural and social capital as free and ignored their responsibilities to protect these. This is changing as natural and social capital is considered “expensive” and brings in the need for new business models and technological innovations. A scenario analysis makes things clear.

Scenario Analysis with uncertainties related to indigenous gas availability and imported RLNG pricing in Pakistan

Scenario Analysis for Sustainability Decision

Scenario Analysis

The Scenario analysis shown above is carried out using two uncertainties which are faced by SNGPL – a company involved in RLNG (Regasified LNG) supply chain in Pakistan. As such the two uncertainties are imported RLNG pricing in Pakistan and availability of indigenous gas. Therefore, putting these two uncertainties along two axes with probability of their occurences provides us with 4 possibilities occuring in the future. 

1. Business as Usual = 12% Chance

2. Competitive RLNG with RLNG-Indigenous gas mix 20:80 = 28% Chance

3. Competitive RLNG with RLNG-Indigenous gas mix 50:50 = 42% Chance

4. Expensive RLNG with RLNG-Indigenous gas mix 50:50 = 18% Chance

It is obvious after studying above 4 scenarios that there is only 12% change for “Business as Usual” to continue, while an 18% chance for the consumers to look for fuel other than RLNG. However, there is 28% chance for a competitive RLNG with current idigenous-RLNG mix and 42% chance for acompetitive RLNG with changing indigenous gas-RLNG mix. Therefore there is a clear chance of success for investments in provision of competitive RLNG in Pakistan.

Above scenario analysis also points towards an important phenomenon which is critically important for business sustainability. It is choosing between “Me-Now” and “Us-Later”. Companies need to consider public good as important as their own profitability. As such the business case for sustainability is often loaded with up-front investments in unsecured returns.

Business Purpose

At this point “business purpose” comes in with the added emphasis on involvement of other stakeholders in achievement of that purpose. Involvement of regulators, competitors, investors, society and customers for achievement of purpose pays in the form of Corporate Sustainability. Such purpose driven systematic change often involves more self-regulation than government regulation.

Further, it may see “Worse before better” and thus investors should be willing to accept shor-term loss to achieve long-term business sustainability. Of course the management plays a key role in driving sustainability strategy which is based on ESG metrics (Environmental, Social and Governance metrics).

 

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