While domestic as well as commercial consumers of electricity are already upset over frequent outages, a recent Asian Development Bank (ADB) report on our energy sector presents a more disturbing picture. According to this report, the demand and supply imbalance as of June 2008 had reached some 5000 MW. Currently our peak hour power demand is 15,140 MW. It is expected to rise to 28,000 MW by 2015; 41,000 MW by 2020; and 60,500 MW by 2025.
What is particularly worrisome is the ADB finding that Pakistan's energy sector remains institutionally fragmented, and that there is a lack of integrated energy planning to address the country's short, medium and long term needs. One of the major problems confronting the energy sector is lack of critical investments by the previous government in the generation and distribution systems, which have failed to keep pace with economic growth.
The other, fuelled by an unprecedented increase in the international price of oil and fiscal deficit, is a circular debt problem. It is adversely impacting generation companies, keeping them from reaching optimal production levels.
An idea of how bad the circular debt situation is can be had from the fact that by the end of FY 2007 the distribution companies (Discos) owed the National Transmission and Dispatch Company Limited (NTDCL) a sum of nearly Rs 220 billion. If the annual financial statements of the Discos and NTDCL are to be believed, this debt had reached Rs 240 billion by the end of June 2008.
First of all, there is need for the government to formulate a comprehensive and integrated strategy to meet our energy sector challenges. Which calls for shunning the ad hoc approach peculiar to our planning and policy-making circles. The circular debt issue deserves immediate attention. Left unattended for long it can easily trigger another, more serious deficit in the form of low productivity and the resultant undermining of the affected production sector entities' capacity to remain competitive. Another issue demanding urgent attention is that of stopping haemorrhaging of the distribution system. Last year, the then Water and Power Minister, Liaqat Ali Jatoi, had made some startling disclosures on the subject.
According to him, Lahore Electric Supply Company (Lesco) had reported line losses worth Rs 170,66.67 million, and its Gujranwala counterpart Rs 6,132.22 million during the two previous years. An even better idea of the extent of the damage can be had from his statement that Larkana Division-II had reported 44.4 percent line losses in 2005-06 and 43.5 percent in the previous year. Add to this Wapda's unique custom of providing a substantial amount of cost-free electricity to its employees and the insistence of Fata consumers on a right to free electricity, and it turns out that nearly half of the power supply is unpaid for.
Creditably for it, the government is said to be trying to furnish the necessary funding to NTDC and the Discos to help them deal with transmission as well as distribution problems. President Zardari has evinced interest in setting up new power generation projects to cope with the current shortages. He also likes - justifiably so - to take credit for the previous PPP government starting a number of private power production projects. It goes without saying that we must pursue all possible alternative sources of energy. The option of importing electricity from Iran too must be pursued earnestly.
Iranian electricity is relatively cheap and has the added advantage of easy connectivity with our distribution system. Notably, the previous government had signed an agreement to import 1,100 MW from Iran by 2009. Iran, in fact, is said have enough spare electricity to provide us as much as 3500MW. That potential must be explored without any further waste of time. It is hoped attention will also be focused on our longer-term needs that, as the earlier quoted statistics show, are going to increase manifold in not-too-distant a future.