Loadshedding in 2016-17 over 16 percent cut in power generation main reason

The Economic Survey 2016-17 notes that the main reason for electricity load-shedding in the country during 2016-17 was reduction in generation of over 16 per cent as compared to the same period last year. According to the Survey, during July-March 2016, although installed capacity increased to 25.1 million MW from 22.9 million MW during corresponding period last year, however, there was a decline in generation and it registered 85,206 GW/h during July-March FY 2017 compared to 101,907 GW/h during July-March 2016.
The decline in the share of hydel generation mainly occurred due to weather conditions and less flow of water in rivers. However there is no significant change in the consumption pattern of electricity. During July-March FY-17, the share of households in electricity has increased indicating that the general public is using more advanced technological products. The government has prioritised industrial sector by ensuring uninterrupted power supply to industrial sector. However, a little decline in share of industry in electricity consumption is due to the use of own captive power plants on LNG by large industrial units.
The increase in share of agriculture in electricity consumption is a positive sign reflecting that farmers are getting electricity for farm mechanization which will in turn have spillover effect on the economy as a whole. Various initiatives have also been started to ensure the sustainability of the reforms envisaged under the Power Policy of 2013 ranging from regulatory reforms to market development. Another important and critical initiative are the projects under China-Pakistan Economic Corridor (CPEC) envisaging a total financial outlay of around $46 billion. Financial outlay for energy sector projects is estimated at $34.74 billion while infrastructure projects are estimated at $13.217 billion. Energy sector projects include power generation and transmission projects to be implemented in IPP mode while infrastructure projects include construction of roads, highways, railways, ports and telecommunications, to be implemented as government to government loans/grants. March 2017, 12 projects have been signed in energy sector with eight projects with PPIB and four projects with AEDB.
One other salient feature as noted by the Survey is the creation of an energy market by moving from the single buyer model towards buyer plus and ultimately to establish an energy exchange market. As a first step in the transition, an agent for the power sector entries and a clearing house has been established by operationalization Central Power Purchase Agency (CPPA-G). Under the executive direction from the ECC (April 30, 2015), NEPRA mandated the CPPA-G to propose the characteristics of a competitive trading bilateral contracts market (the CTBCM). As part of this assignment, the CPPA-G has reviewed several market models established in other countries, trying to extract from them the most important lessons and using this information to develop a customized model for the energy sector in the country. CPPA-G is working on development of self-sustainable power market with the least intervention and subsidy support from the government of Pakistan.
In medium term, National Power Policy 2013 had also focused on reducing the basket price by introducing generation on cheaper fuels. Altering the fuel mix towards less expensive fuels will lead to low cost energy. Investments required for the low cost fuel mix will necessitate rationalization of the electricity tariff. In this regard, both Private Power and Infrastructure Board (PPIB) and Alternative Energy Development Board (AEDB) are playing a vital role on behalf of the government of Pakistan in materializing government commitment of adding sustainable and affordable power generation to the national grid. Thus energy imports of liquefied natural gas (LNG) and coal along with utilisation of domestic resources like construction of Thar coal mines, hydro power stations, nuclear power plants, as well as several solar and wind farms will significantly reduce the country''s reliance on oil in the medium term and improve the energy mix.
The present government has given high priority to energy sector, thus making significant efforts on all fields ranging from immediate steps to long-term plans. As an immediate step, the government retired the circular debt at the start of its administration.
The government has also substantially brought down power subsidies and has significantly contained the accumulation of new payable arrears in the power sector by: (i) improving Discos ''performance, (ii) rationalizing tariffs, and (iii) reducing delays in tariff determination. The subsidy for power sector which were Rs 464 billion (2.3 percent of GDP) in FY 2012 has been consistently reduced to Rs 217 billion (0.7 percent of GDP) in FY 2016. All this was done while protecting the vulnerable consumer segments of the country. Further, Circular Debt Capping Plan is effectively managing the power sector financial flows, stocks and subsidy budget, the Survey maintains.
The "National Power Policy 2013" was approved by the CCI to address the key challenges of the power sector and to achieve the long-term vision of the power sector. The policy focused on short term, midterm and long term objectives to make the power sector sustainable. In the short run, two critical issues were addressed on a fast track basis. One issue was inefficient recovery system while the other was effective control of transmission and distribution losses.
The Survey claims that Ministry of Water and Power has shown significant improvement on both issues. Recoveries from end consumers reached 94.40 percent during July-March FY-2017, being highest in the past ten years while transmission and distribution losses declined to 16.3 percent during this period.