Overdue decisions in the power sector

The performance of the most capital-intensive sector of the country considered as the backbone of the economy leaves much to be desired.

In 1947, Pakistan had an installed generating capacity of 60MW, which increased to 7000MW by 1991.

The government established WAPDA as an Integrated Utility in 1959.

The following goals set in 1992 for Wapda’s Strategic Restructuring have not been met to date:

• Enhance capital formation;

• Improve efficiency and reconcile the prices; and

• Introduction of competition to the power sector with the passage of time, by providing the greatest possible role through privatisation.

Thirty-two years later, excluding Nepra (National Electric Power Regulatory Authority), we have grown from one entity that was WAPDA (Water and Power Development Authority), to 21 entities after DISCOs (12 including KE), CPPA-G (Central Power Purchasing Agency-Guaranteed), NTDC (National Transmission and Dispatch Company), PPMC (Power Planning and Monitoring Company), PITC (Power Information Technology Company) , power generation companies GENCOs (4) and PEPCO (Pakistan Electric Power Company).

And CTBCM (Competitive Trading Bilateral Contract Market) mandated to NTDC in 2004 and to CPPA-G in 2015 and its approval in November 2020 awaits judgment of Nepra after hearing on its Test Run Report in July 2024. Furthermore, a debate on privatisation is still in progress.

Pakistan’s need for a 7-9% GDP growth requires accepting our decades of mismanagement, learning from it and undertaking an aggressive reform battle.

That requires ease of doing business, encouragement of FDI, and a competitive market approach with GOP not running businesses has to become the norm. This requires immediate

• Execution and roadmap for Deregulation of energy (Generation, Transmission, Distribution and Retail in the power, fuel and gas sectorial) is an essential action;

• Building a strong regulatory environment;

• Undertaking changes post-18th Amendment;

• Ensuring a competitive environment and working out challenges in way of expeditious implementation;

• Ensuring Transparency, Advocacy and Continuous Improvement by recalling that Carl Lewis in the ’80s and ’90s had a record-breaking 100m time of 9.86 sec. In Olympic 2024, Oblique Seville from Jamaica matched that time and came in last. Success is not static but evolves and what was amazing yesterday is baseline today. Learn from the past, always aim higher, keep pushing boundaries and learn new methods to stay ahead.

Currently, there is no single body responsible for overseeing strategic planning and design of the country’s electricity, fuel and gas networks. Formation of an independent National Energy System Operator will fill this gap – breaking down the silos, which currently exist between the planning of electricity and gas systems, with independent oversight for the design of all Pakistan’s energy networks.

Electricity, oil and gas network planning be brought under its roof to support the clean energy transition, accelerating government’s clean power mission of 2030, facilitating our energy security with regional play, keep energy bills down in the long term, assist in achieving GDP growth of 7-9% by managing economy heating up and CAD (current account deficit) imploding beyond $70 Brent.

This independent organization will map out the country’s future energy networks – helping both the government, MoE and the combined Regulator-formed by the merger of Ogra and Nepra — make informed decisions.

It will take a cross-sector approach to planning the country’s energy system in the best interests of the public - looking across electricity, gas, oil and hydrogen, as well as renewable generation, storage and other emerging technologies

• Builds capacity, creates culture of delegation with authority, instills ownership, provides financial powers, undertakes efficient processes and undertakes back office synergy

• Delivers people customer service-focused integrated (1+3 and 5+10 year) revolving plans ingrained on data and financial analysis of business cases to increase revenue streams, create efficiency, enhance productivity and conservation;

• Having strong project management capability

• Undertaking mergers, vertical integration, expediting 3Ps, doing away with rules of business impediments and improving processes in redefined firm.

Our key reports need to consider the following:

IGCEP by NTDC should now also provide a network blueprint for the country, mapping the demand and optimal locations for offshore and onshore transmission infrastructure to support a decarbonised energy grid. This advice will also cover how to spread new energy projects across the country in a way that will reduce the costs in transporting power to homes and businesses, which could in turn bring down bills for consumers.

TSEP by NTDC needs to set out a coordinated approach for onshore and offshore energy infrastructure to help cut grid connection waiting times and provide cost-effective energy generation. Also work at a local level, with plans to deploy regional energy system plans across the country. The role is to work with local authorities and energy distribution networks to improve understanding of regional infrastructure needs, paving the way for new skilled jobs across the country.

They also need to keep on learning and ensuring capacity building by reviewing developments with the likes of Electric Reliability Council of Texas, Inc. (ERCOT which supplies power to more than 25 million Texas customers and represents 90 percent of the state’s electric load, the California Independent System Operator (CASIO) that oversees the operation of California’s bulk electric power system, transmission lines, and electricity market generated and transmitted by its member utilities).

Both documents to build and advise on how future energy demand and supply could be met by making changes to infrastructure, technology, innovation and consumer behavior in line with net zero targets in the form of a future energy scenarios report by studying trends and IEEE reports with input from PITC regarding emerging smart metering technologies, which are the first steps towards creating a Smart Grid.

Many methodologies have been tested and implemented with AI techniques being one having gained much recognition to deal with uncertainty around wind and solar, which adds to numerous problems with complex interconnected power systems.

Internet of Things and the 4th industrial revolution will be based on Cyber-Physical Systems that will monitor, analyze and automate business processes, transforming production and logistic processes into smart factory environments where big data capabilities, cloud services and smart predictive decision support tools are used to increase productivity and efficiency.

This evolution is driven mainly by emergence of distributed energy resources (DERs) to satisfy societal concerns regarding the utilization of renewable energies and reduction of greenhouse emissions as well as the introduction of a plethora of new communications, control, automation and power electronics technologies and solutions that have emerged as a consequence of computing power and are enabling the long pursued objective of end-to-end real-time system awareness and operation, covering generation, transmission, and distribution systems as well as the grid edge.

CPPA-G should produce a report every six months on progress on implementation of CTBCM for evolving a competitive environment, day ahead trading, including challenges with monitoring implementation timeline.

They also should learn from likes of ENTSO-e, the European Network of Transmission System Operators for Electricity, which represents 40 electricity transmission system operators (TSOs) from 36 countries across Europe, thus extending beyond EU borders with mandates aimed at further liberalising the gas and electricity markets in the EU. Similarly, European Network of Transmission System Operators for Gas (ENTSOG) is responsible for a number of regulatory tasks on behalf of Europe’s gas transmission system operators (45 TSOs) whose role is to facilitate and enhance cooperation between national TSOs across 26 European countries in order to ensure the development and coordinated operation of a pan-European gas transmission network that is capable of meeting Europe’s current and future needs. In doing so, ENTSOG will contribute to the completion of the internal market for gas, help stimulate cross-border trade and access, and increase the interoperability of existing regional transmission systems and purpose is to further open up the gas and electricity markets in the European Union.

State of Industry Report of Nepra to capture the outcomes of each deliberated report and accordingly update and steward National Electricity Plan.

It is to be noted that there is no Magic Wand for implementing immediate solutions in a sector venerable to shocks due to global events and having profound impact on local business and consumers.

Yet maintaining status quo is no longer an option and the sooner we change course, the better we will become at decision-taking and looking beyond the horizon.

Therefore, we, as a nation, need to hold stead to measures taken, appreciate that turnaround requires time, patience, and endurance and not continue with a hopium narrative; appreciation that homegrown change management is a must, needs to continue with changes along the way.

Perseverance commands success.

Copyright Business Recorder, 2024