EDITORIAL: Considering Pakistan's many energy-related problems, or perhaps because of them, it is lucky to have the interest of something called the Pakistan Foreign Investors Forum (PPIF), a group of international solar and wind energy sponsors. The large import bill, the ever-rising circular debt and the high tariffs have combined to make the energy sector, in the words of no less than the prime minister himself, the number-one problem facing his government since it took over. That is why the government, forward-looking as it is, has always been in favour of diversifying out of fossil fuel-based energy towards Alternative and Renewable Energy (ARE) projects.
Yet, that is precisely why it is something of a concern that PPIF has had to seek the PM's help in removing roadblocks to cheap 425mw ARE projects of less than four cents (Rs6.3) per unit. It turns out that the National Electric Power Regulatory Authority (Nepra) cleared their generation tariffs some time ago, which are the lowest in the country so far, but the ministry of energy has not issued its gazette notification for almost 5 to 10 months because of 'lacunae in an April 2019 decision of the Cabinet Committee on Energy (CCOE)'.
The CCOE decided that future energy projects would be inducted through competitive bidding, for which it set three categories. And while it allowed projects in the first and second categories to proceed, it put 104 projects, including eight renewable energy projects of 425mw, in the third category. PPIF now claims that these eight projects were already in their advanced stages and were "inadvertently put in category III." And that is where the matter has remained all this time even though everybody, is firmly behind the government's vision of increasing RE share in the energy mix to 25 percent by 2025 and 30 percent by 2030.
But since right now the installed capacity of solar and wind energy in Pakistan is just four percent of total capacity, equal to about two percent of total generation, the country has to cover a lot of ground very fast to even get close to its own rather ambitious deadlines. It will not help, of course, if needless bureaucratic hurdles are going to harass any serious investment that is coming our way on its own.
The Power Division now says it can only take the next step on the issue once it receives something in writing form the Prime Minister's Office (PMO). The prime minister, then, should make sure that his office forwards in writing whatever the Power Division needs because pushing these ARE projects through will, as aptly put by PPIF, "pave the way for not only reducing the country's energy cost, its import bill and circular debt but will also bring in much needed foreign investment of about $500 million."
We must be very quick to take advantage of such opportunities as and when they arise. According to the World Bank, Pakistan has tremendous potential to generate wind and solar energy, and even utilising just 0.071 percent of the country's area for solar photovoltaic (PV) power generation would meet its current electricity demand. Besides making electricity much cheaper, expanding renewable energy can also help achieve greater energy security, reduce carbon emissions, and enable the government to save up to $5 billion over the next 20 years.
Yet Pakistan's energy mix continues to be dominated by expensive fossil fuels, even though the sector is already pretty much a thing of the past. It is only a matter of time before the whole world gets onto the bandwagon of renewable energy, as indeed the world's advanced countries have started doing, so Pakistan should take advantage of the natural advantage it enjoys in terms of wind and solar power and position itself ahead of the curve. Such a transformation will no doubt require meticulous planning and execution, not to mention sizable and targeted investments. And it just doesn't send the right signal to anybody wishing to invest in this sector that there's a very good chance of getting lost in all the bureaucratic red tape. Hopefully, the situation will not get any more embarrassing and the prime minister will not just untie this particular knot, but also ensure that something like this doesn't happen again.
Copyright Business Recorder, 2021
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