ISLAMABAD: World Bank and Power Division are said to hold weekly meetings to achieve prior actions on Programme for Affordable Energy (PACE-1).
The World Bank Vice President for South Asia Region, Hartwig Schafer who recently visited Pakistan and met with different top officials has written a letter to Minister for Power, Khurram Dastgir Khan, saying that he appreciates the Government’s plans to continue addressing the challenges of the sector, particularly in terms of its financial sustainability and the circular debt, increased load shedding, and the importance of transitioning to renewable energy, in particular solar power, which can help to meet daytime cooling demand.
According to the Bank, negotiations concluded with 32 IPPs last year, whereas discussions with remaining IPPs are ongoing but no conclusion is reached as yet. The status of this prior action is delayed. However, National Energy Policy (NEP) is on track. Transmission System Expansion Plan (TSEP) is also delayed as it is not submitted to NEPRA.
Prior action about retargeting of subsidies is also delayed as relief package caused backtracking as it will increase subsidies for non-protected compared to FY 21.
Secondly, the work on agricultural subsidy is ongoing, with expected completion by July 2022. Prior action about bringing efficiencies is also delayed and private sector participation in Discos is stalled.
According to the World Bank Vice President for South Asia, the current situation highlights the vulnerabilities in the sector caused by overdependence on imported fuels.
“The power sector reform program that is supported through Bank’s PACE operations is precisely designed to address this and other challenges faced by the sector. As such, we believe that the Government’s renewed commitment to achieve progress on all six PACE-l reforms (prior actions of the operation) is important and timely, as these have experienced significant delays since January 2022,” he added.
Hartwig maintained that the Bank was very much looking forward to seeing the reform program to accelerate again as soon as possible.
“I welcomed the decision to resume the regular (weekly) consultation meetings between the World Bank’s technical team and the Power Division, so that the collaboration on these reforms can be strengthened,” he said, adding that the Bank’s Mission also discussed with Power Division’s team the regulatory process for FY22 tariff rebasing, quarterly adjustments, and notification of phase two of the subsidy reform. Following the regulatory process remains crucial, considering the increased fiscal pressures within the sector.
Similarly, for progressively reducing the growing sector deficit (circular debt), there is a need for equitable burden sharing of the generation costs among consumers, government and the private sector, he maintained.
“We also agreed that it is important and urgent to involve the private sector in the electricity distribution sector,” he said.
Copyright Business Recorder, 2022