LAHORE: Despite severe energy crises, Pakistan could not harness its indigenous energy resources appropriately.
According to the energy sector experts, there are severe institutional weaknesses in the energy departments of the country, leading to a heavy dependence on foreign-funded Independent Power Producers (IPPs).
Nayyar Hussain, an energy expert, said the energy departments lack required resources, infrastructure and professional competency in their manpower. Various useful energy planning studies undertaken with international support could not impress government to devise rational energy policies. These studies somehow generally lacked integrated energy planning approach, he added.
He said the first ever power policy announced in 1994 encouraged investments from private sector in the power generation based on imported fuel to achieve energy conservation and enhancing electricity generation of 13,000 MW through Independent Power Producers (IPPs). The Private Power and Infrastructure Board (PPIB) was set up to facilitate the one-window operation. The policy not only guaranteed payment of fixed "capacity price" to IPPs regardless of generation of electricity but also extended immunity from various taxes and surcharges such as income tax, customs duties and sales tax, for importing equipment by IPPs'. A bulk tariff of US cents 6.5/kWh for WAPDA to purchase electricity from IPPs was determined and for the first time fuel supply and power purchase agreements introduced as well. The policy also provided foreign exchange risk insurance for the IPPs.
The 1994 energy policy brought a decisive shift in Pakistan's diverse energy sources. In 1994, out of the total installed capacity of 11,000 MW, 60% of energy was produced from the hydropower power sources while nearly, 40% was produced from the thermal and nuclear power plants. This mix was reversed from 60:40 to 30:70 in favour of thermal capacity based on imported fuel. Every year, this ratio went down further to 20:80 in winter months as hydropower generation was reduced due to lower water flows in the rivers.
The subsequent polices too could not deliver as they lacked appropriate integrated energy planning efforts behind them. As such, absence of energy polices based on Integrated Energy Planning (IEP) and effective governance has plunged country into the ongoing energy crisis. As such, moving further government in 2002 announced another power policy with focus to promote private, public-private and public sector projects in the power generation sector. The competitive tariffs comprised an Energy Purchase Price (EPP) and a Capacity Purchase Price (CPP) with sufficient provision for escalation. The policy ensured fuel supply and power purchase agreement and encouraged local industry to form joint venture to develop power projects to attain a capacity of 20,000 MW by 2015.
In order to address the energy crisis the energy expert Mohammad Aslam said the institutional set up of energy departments needs to be rationalized by removing their overlapping functions. For example, the mandate of electricity regulator NEPRA as per law to advice government on safe and effective ways of meeting electricity demands at affordable cost should be realised. He said sustainable energy options should be explored with maximum development of indigenous resources to meet demand.
Copyright Business Recorder, 2020
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