The two announcements reported in the media this week show how confused those running our power sector appear to be. The first said the government is considering setting up mobile power plants to compensate for delays in ongoing power projects, thereby putting an end to public protests by opposition parties. The second said that the Council of Common Interests (CCI) has stripped Nepra of its autonomy and, more important, its power to determine electricity tariffs more in keeping with public interest.
Both appear to be politically driven in view of the forthcoming general elections. More such concessions can be expected to surface until the eve of the elections. The government's novel idea of positioning mobile power plants to provide some kind of first aid to the energy sector, at politically sensitive locations, indicates that its power policy has not worked and the coming year will not be one of a Pakistan freed from load-shedding. The current shortfall of over 5000MW or more is expected to continue in 2018 and beyond, and with it the prolonged power outages.
The mobile power plants are similar to the Rental Power Plants, except that the mobile plants can be moved around whereas the other are at fixed at locations. The government plans to position the mobile plants for one year, as if expecting a better 2019 or the start of a countdown to the day when the power shortage will supposedly come to an end.
Rental power plants were introduced by the Musharraf government, and conveniently inherited by PPP government. So we are back to where we started out with Nawaz Sharif's nemesis. The Rental power plants brought no relief either, with the continuing, but vested interests did got the opportunity to squander public money. As a result of their low, or nearly absent, power outputs the plants turned controversial over allegations of widespread embezzlement. Eventually, all of them were abandoned, more so in the wake of the Supreme Court's ruling declaring all the rental power plants illegal and ordering their shutdown. The court also ordered initiation of cases against those involved in the virtual scam.
The present government is reported to be considering the possibility of utilising the idle capacity of Independent Power Producers (IPPs) and captive power plants of industrial units in a bid to bridge the demand-and-supply gap and shorten the durations of load shedding. The urgency to run to these options is that the power projects positioned in the last three years would take another few years to come on the national grid. The government is now in panic mode because of the countdown for the 2018 elections.
It is projected that load shedding in May will turn out to have been for six hours in urban areas and eight hours in the rural. However, during Ramazan the duration of outages will be brought down to three hours for urban areas and four hours for rural. This will be managed by introducing eight hours of load shedding for industrial areas and nine hours for the mixed industrial load areas. This schedule of load shedding will continue for the remaining months of summer and in return next April.
In all theories of wisdom, the government must abandon the use of mobile power plants, unless it wants another fiasco like rental plants, if not something even worse. The government's option of utilising the idle capacity of IPPs and captive power producers is good and viable option. Investment in this sector will be a rewarding effort to overcome the current crisis, and for the future. Also, the results will be faster and more reliable. Investments for revitalizing of the depleted capacity of power plants in the public sector will be cost-effective and time-effective and more permanent. The government at the same time must seek power efficiency and conservation methodology through innovations and attractive tariffs to the consumers. At the same time it should reduce line losses and power thefts. All of this requires a lot of hard work but it is doable at a much reduced cost and time as against mobile power plants, which were non-starter from day one.
The second jolt to the transparency of the power sector is that the Council of Common Interests decided this week to clip the powers of Nepra to independently determine electricity tariffs at the CCI meeting, which was presided over by Prime Minister Nawaz Sharif and attended by the chief ministers of the provinces. It is reported that major changes were approved to amend the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 - commonly known as the Nepra Act. The changes bind Nepra, the main power-sector regulator, to follow government directives in determining tariffs. This means the authority will lose its independent powers to the set consumer-end tariff. Moreover, an "independent panel" will be formed, which could challenge Nepra's decisions.
The reason reportedly cited for the change is the regulator's alleged failure to perform functions for which it was created, because of inefficiencies, and as a result hampered private sector investment, instead of being a facilitator. The Punjab government is reported to have stated that it has recently been able to bring down solar power tariff to less than six cents per unit, a role which should have been played by Nepra. It alleged that the power regulator was incapable of handling important issues and its attitude was damaging to the power sector. Besides, according to it, challenges facing the sector were not being resolved, despite a strong commitment by the government. These sources said the Sindh Chief Minister also criticised Nepra for its alleged creation of irritants to renewable energy and promotion of Thar coal projects.
Earlier, the Chief Ministers of Sindh and Khyber Pakhtunkhwa had strongly criticised the clipping of Nepra's powers. But the freedom to act unchecked is good to everyone and on this one-point agenda the government and opposition are unanimous. A new clause has been added to the law that gave the federal government powers to impose a surcharge on such consumer categories as may be notified in the official gazette for collection by the companies and empower the government to use it for "discharging public service obligations." This addition is meant to address challenges arising out of judicial interventions against three existing surcharges imposed for debt servicing and tariff equalisation.
It was agreed in principle that all the provinces will have their own power regulatory bodies, instead of a national regulator having countrywide jurisdiction, because electricity is a provincial subject under the federal legislative list-II. This means the country will be more of a "Provincial Grid Network" rather than a national one, with each province determining its own tariffs. How this will be applied on ground, considering we only have one national grid, is questionable. And not practical at this stage.
(The writer is former President Overseas Investors Chamber of Commerce and Industry)
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