Another year is upon us. Another year gone by in trying to resolve the power crisis that has engulfed the country for the past decade now. The government has been busy investing in energy projects and the advent of CPEC has brought in a massive influx of investment in the energy sector.
Taking stock of the developments in 2016, it can be safely assumed that generation wont be a problem, as various projects are scheduled for completion by 2018. These include the three R-LNG power plants of 1,200MW, which would contribute 3,600MW in the system. The two 1,320 MW coal power plants in Sahiwal and Port Qasim will also be online come election year.
On the hydel front, Neelum-Jhelum and Tarbela 4th extension will also be adding 1,500MW, albeit the deadline for Tarbela extension might be missed. But on the whole, generation will not be the area the government has to focus on in 2017, as more than 11,000MW will be added to the grid by the end of 2018.
The trouble lies in the transmission and distribution sector, which the government institutions have been slow to revamp. As this column has previously discussed, the recovery of dues and the transmission network should be the biggest priorities right now. NEPRA has also lambasted the National Transmission and Dispatch Company (NTDC) for its poor performance in upgradation of the grid and the abysmal state of its faulty recording equipment (Read: NTDC: Another white horse, published November 21, 2016).
The regulator had highlighted that by the end of 2016, almost 1,500MW of wind power was expected to be available, but completion of power evacuation arrangements for these power plants has led to delays.
However, there are some positive developments taking place in issues such as tariff determination and the power sectors rate of return. The government as well as the regulator has moved towards competitive bidding for energy projects, which is a welcome move. The tariffs for renewable energy projects have come down, with future tariffs to be decided by competitive bidding as well.
The regulator is also in the process of coming up with a better method of determining the power sector return that is more balanced but has incentive for increased private sector participation. In addition, the policies being drafted should be aligned with creating an energy mix that is cognizant of the indigenous resources available.
But the new year has started with news about clipping the regulators wings, which this column has commented upon. The government must tread carefully in proposing changes to the NEPRA Act 1997 or risk undoing the hard work that has been put in developing an effective regulator.
For the future, this column believes that increased private sector participation should be encouraged in the energy sector of Pakistan which should include transmission projects as well. Particularly, a competitive environment should be fostered when it comes to electricity procurement. This column realises this will take time, but if the government plays its cards right, it will be able to reduce its role and increase efficient players in the energy landscape of the country.
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