Power policy

Minister for Power Sardar Awais Ahmed Khan Leghari announced on Wednesday that a national electricity plan is being devised to enable consumers to select the electricity company of their own choice.
In an address at Islamabad's Sustainable Development Policy Institute, he said a national electricity policy was being formulated, to be finalized after its approval by the Council of Common Interests. A legal amendment would be presented in the next parliamentary session to encourage competition in the distribution and transmission sectors, with objective of benefiting power consumers.
At the same time, the Ministry of Power is being restructured, with the addition of a professional wing, to tackle the technical issues and to fulfil the need to reform the distribution companies, he said. The move is likely to reduce the circular debt and promote transparency in power supply by the Discos.
The Power Division is reported to have written to the chief ministers of the provinces, asking for their support in recoveries and against power theft in order to ensure zero load-shedding in more parts of the country.
The minister proposed the establishment of a joint task force by the federal and provincial governments for development of uniform measures, information-sharing and improved coordination.
He asked the provincial governments to nominate officials to lead the efforts in this regard.
The minister said the federal government has been able to bring Pakistan out of an energy crisis by having electricity added to the national grid.
The Sustainable Development Policy Institute has published a comprehensive report on the subject.
Highlights of this report include a solution to T&D losses through the introduction of micro grids and smart grids, which aim to meet the challenge of line losses. The report also has maps showing the distribution of line losses in the country. It said the long-term goals would be to fully utilize the potential of Pakistan's shale gas reserves (105 TCF) and shale oil reserves (9.1 billion barrels). The report gives short-term, medium-term and long-term strategies regarding shale gas.
The report says the country should move towards high efficiency and lower emissions (HELE). He underlined the importance of natural gas for the country by retrofitting of thermal power plants to improve the efficiency of existing gas-fired power plants and recommends a fuel audit to determine a merit order for gas allocation to thermal power plants.
Saying that while diversification of energy mix with coal is an option, the report recommends that ultra-super critical plants be installed in the country to achieve greater units of power generated in relation to the fuel consumed. It underscored the principle of efficiency which forms the umbrella of Pakistan's Energy Vision 2035.
While the thoughts and vision of the Minister of Power to re-shape the power sector landscape is commendable, it is over-ambitious and unrealistic, considering the present pathetic state of the power sector of Pakistan. It can best be a prospect of the far future, for which maturing the present power sector of Pakistan is a prerequisite.
'Power trading' which provides the consumer the choice of selecting the company of his choice to get electricity is possible in a de-regulated market where the number of power utilities are in the market, providing the consumer the choice of selection. The power purchase price is dictated by a market based on supply and demand and fluctuates accordingly.
Many countries now have a deregulated market. The latest entry in the field is India. It is reported in some counties at times of surplus power availability the consumers are encouraged to avail electricity at no cost.
Pakistan's power sector is far from this landscape. The market is regulated and consumer prices are dictated by Nepra, whose position as an independent body to also cater for the interest of consumer has been compromised since it was placed under the Ministry of Power. Further, the consumer of Pakistan is restricted to one supplier and does not have multiple suppliers to select from.
To inch towards the vision of deregulated market and provide the consumer of Pakistan the electricity source of its choice, the government of Pakistan has to first privatize the power generation and distribution companies in the public sector and align the Independent Power Producers (IPPs) into a framework which could be a base to build up the de-regulated power sector in the interest of the consumers.
The PML-N government started well in 2013 with the task of privatizing the power utilities in the public sector as a priority task. Financial advisors, through a fair and professional process of competitive biddings, were appointed and the process of privatization commenced. But, presumingly on account of political considerations and a desire not to upset the vote bank, the privatization process in the third year of the PML-N's tenure was aborted and much of the public money paid to financial advisors wasted. Also, much against the claims of the government, the power utilities in the public sector in the meantime could not be restructured to make them financially viable and operationally efficient.
The whole power supply chain comprising fuel suppliers, the IPPs, the power utilities in the public sector is messed up. This is reflected in the unending circular debt which today stands at around Rs 500 billion.
Pakistan's power sector today is confronted with two main issues viz: the non-availability and unaffordability of power.
There still remains a peak demand and supply shortfall of around 8000MW in the country, carving out around two percent of the country's GDP and severely denting its economy.
Today, the electricity cost in Pakistan is one of the highest in the world, which severely affects our industrial growth and exports and is one of the major deterrent for foreign investors.
The change in fuel mix by diverting to coal and LNG has not brought down the electricity cost and offered no price relief to consumers.
The ministries, Wapda, the World Bank, the Asian Development Bank and think tanks from the private sector come up with great yearly reports suggesting brilliant ideas and policies. There is no shortage of any of these. The gap is in the implementation and in governance.
The power sector of Pakistan is infected with lethargy, poor governance across the board, lack of will and competence to deliver and above all vested interests and political expediency.
The need is to bring around governance and competence in the energy sector which has the will and competence to implement good policies and vision. Once this is fixed all great ideas will fall in place.
Pakistan's power sector infrastructure is the most experienced in the region. The power generation and distribution network under the ambit of Wapda and KESC grew exponentially, meeting the electricity needs of the new budding country. There were times when the generation capacity surpassed demand and there were talks for its export.
Pakistan was the pioneer in the region to introduce IPPs and was the trend setter.
But years of poor governance and only the poor governance systematically dented our once robust power assets.
The deregulated power market is the future for the economic growth of Pakistan. And based on the available infrastructure it is possible to achieve. But much has to be done towards this end on ground and less on papers.
(The writer is former President of Overseas Investors Chamber of Commerce & Industry)