The dumb national electricity policy of 2021

A good public policy is one that addresses a societal problem effectively, is based on evidence and research, considers the needs and perspectives of diverse stakeholders, promotes equity and justice, is feasible to implement and allows for monitoring and evaluation to assess its impact and make necessary adjustments.

Some key characteristics of good policy include clarity and specificity, relevance and purpose, consistency and coherence, flexibility and adaptability, evidence-based and informed, inclusive and participatory, and measurable and achievable.

In other words, a good public policy is necessarily people oriented and moves fastly and cleanly towards the desired outcomes. In other words, any policy to the contrary cannot ever be labeled as something good for the people. Furthermore, in the Pakistani context, policies which do not assure access to public finance, of some value, are also bound to fail.

Pakistan’s power policy landscape is fraught with serious complexities and a glaring mismatch between policy objectives and realities. Amongst factors that push the country into literal darkness are the Circular Debt (CD), inefficient infrastructure, commercially burdensome PPAs with IPPs, operational bottlenecks across the value chain and the weight of the current lop-sided usage – primarily, tilted towards the pre-dominant non-productive categories.

The National Electricity Policy 2021 is a document, which has not been able to make any mark on the national horizon, although it envisages to ensure universal access of electricity through a self-sustainable power sector, developed and premised on: optimal utilization of indigenous resources; integrated planning approach; efficient, liquid and competitive market design; and affordable & environment friendly outcome for the consumers.

While envisioning universal access of electricity for the whole country (not really saying but it is construed so) in the sustainability part, it focuses on self-sustainability of the entities involved, rather than promising anything for the unsuspecting people of Pakistan, who in all probability will ever have to take the burden of sustaining the sector, be it’s on account of fraudulent and wrongful contracts, etc.

It is averred that the sustainability of the sector is of paramount importance, and all sectoral entities shall strive to take such steps as are required to ensure so. This shall include: measures to minimize environmental degradation, technical and operational sustainability, integrated development of the power sector, and financial self-sustainability, include progressive elimination of Circular Debt (CD) – even, if the CD was accumulated due to reasons not attributable to the consumers. The energy intensity optimization, coupled with enhanced energy efficiency and conservation measures, will also contribute towards overall sustainability. Great words, but seemingly meaningless.

Coming over to the financial viability of the power sector, the policy goes on and suggests promoting investments on least cost basis balanced with development in the underserved areas, having cost-reflective tariffs in transmission and distribution, to the extent feasible, timely passing costs to the consumers, while netting-off any subsidies funded by the Governments: and recovery of costs arising on account of open access, distributed generation, etc. The last of the covenants has, unfortunately, assured that no open access ever happens.

All in all, everything has to be done by the entities themselves without any help or assistance from the government which owns the same entities employed to serve the Country. It further envisages that different financing or investment options may be explored by the state-owned distribution companies for expansion of the distribution network, including financing/investment by provincial governments or DFIs, PPP models (only on BOT & BOOT basis) and G to G arrangements.

All developments under the PPP model will be carried out on competitive basis, providing equal opportunity to all interested parties. Any network expansion by distribution companies should be carried out in accordance with the distribution investment plans approved by the Regulator and, where applicable, shall be duly aligned with the IGCEP (Indicative Generation capacity Expansion Plan) and TSEP (Transmission System Expansion Plan).

A little foray into the above suggestions reveals that actual investment by the state remains precluded from the sector and it is purely left to the shenanigans of the so-called investor(s). That, none of the investments, right from the setting-up of the first private power plant in shape of the 1292MW Hubco plant in the South of Pakistan, has left anything for the poor Pakistanis to live – by is conveniently forgotten.

The present electricity tariff jumping quadruple each year is the test of such investments till date. What could thus be the epithet for the Electricity Policy for 2021. Surely, dumb, to say the least.

One thing is for sure that the above policy accepts that the power sector is in a bad shape and in order to turn around the performance of state-owned distribution companies, a strategic roadmap shall be developed by each of them, with the inputs and consultation of the Ministry of Energy (Power Division).

As to what the totally non-professional Division would offer is left to be divulged and deciphered afterwards. Further, the roadmap shall entail interventions for improvement of corporate governance, technical capabilities, safety, and commercial performance.

Presently, such interventions are being undertaken by the fully politicized BoDs, etc. and one could easily understand the content of these interventions. The roadmap then envisaged to set-out clear activities, and milestones to be achieved, with timely performance evaluations.

The Ministry of Energy (Power Division) or its designated entity shall also be responsible for monitoring the performance of state-owned distribution companies in the context of the approved roadmap. Again, as to what the newly christened PP&MC (Power Planning & Monitoring Company) – an arm of the same power division, has done is again left to imagination.

What should be the requirement. This is a question which has been asked by this writer from various experts. Besides, an effort too has been made to scour such policies across the globe. Such traversing has revealed that there were different and distinct solutions for the developed and the developing world and also across various civilizations. In other words, the sociology and geography of the territory affects the outcomes.

The study of the countries around us leads us to the conclusion that the state has to step in to arrange for the needed level of service for the public, unlike evident in Pakistan where the state has taken the back seat since long. This could be done through the policy under discussion by making a provision for yearly outlays. This could be up to Rs. 250 billion or so.

Keeping the current priorities in view, all of these outlays could be spent on generation – thus reducing the cost of electricity. These plants could then be privatized to local business houses for optimum operations.

Here, it is important to emphasize that on account of apathy and non-appreciation of requirements, the infrastructure in most of the so-called loss-making DISCOs has been left in a decrepit state, and which is responsible for great losses. This aspect thus has to be considered for capital outlays. Once this is done, then the same lackluster policy will gain credence and become a national policy.

What is the position at the moment? Even if we forget other deliverables, we see that the electricity rates / tariffs are prohibitive. It is seen that during the last 24 years between 1990 till 2024-at present, the tariff from any average of Rs. 1.37/unit has reached the level of Rs. 34.31/unit [with additional taxes adding another Rs. 8.73/unit] i.e. a rise of Rs. 25 times.

This rise has no relevance to any of the variables including the PKR-US$ parity. In other words, the present tariff is on account of other reasons, which could be the additional profit centers created through the induction of private generation and the GOP’s penchant to burden a few categories of electricity consumers with inter-tariff and inter-DISCO subsidies – thus shirking it’s socio-economic obligations. It too is a fact that even this high tariff is unable to save the Sector from oblivion. Grid cover remains static at pre-2010 levels.

Gwadar’s continued woes and GoP’s acquiescence before the proposed highly over-invoiced coal-fired 2nd generation 330 MW power plant, is a pointer towards this fact. Blackouts are a regular feature during the foggy winter periods and the BoDs – actual managers of the sector, reek of complete politicization.

The power sector has, in fact, become the proverbial dead weight around the nation’s neck. So much is the importance of the NEP-2021, that there is a total disregard for both the IGCEP and TSEPs and projects are being thrust on the sector at will and surely on the basis of whimsical grounds and such decision making. Not even the requisite detailed studies are being carried-out or contemplated to be undertaken. In fact, deviations are the rule of the day.

As any bulwark against all of the above, the NEP is nowhere to be seen. In actuality, it does not feature at all.

The reason could be the natural proclivity to accept anything from the top – specially, if a particular project or way of doing things is championed by the highest in the realm. In other words, it is the continued non-professionalism of the bureaucracy and the relegation of the professional in the scheme of things. On the other hand, if the NEP-2021 had the necessary teeth, then the situation could have been different. Had due legislation been taken up and then enforced, the present rot in the power sector could have been stemmed. So, let’s re-do the NEP altogether as a truly national policy.

Copyright Business Recorder, 2024