Pakistan’s energy sector (especially power) is facing a trilemma of affordability, access, and sustainability, and all-around efforts are required (and partially being deployed) to tackle this – ranging from the crackdown on electricity theft, efficient allocation of energy resources and planned investment in the generation, transmission, and distribution network.

The good news is that, lately, across the country, there has been a crackdown on electricity theft that directly or indirectly contributes to line losses and recovery challenges and subsequently builds into the circular debt and deterioration of the network.

Then discussions are being held on the efficient allocation of resources used in electricity generation. Some quarters continue to advocate the efficacy of WACOG, correcting price distortions and allocation of gas to the power sector. These are necessary, but not sufficient, as more is warranted.

In terms of long-term planning, the next couple of weeks are important, as NEPRA is scheduling hearings on the power acquisition program of XWDISCOs and KE. Each Distribution company has determined its expected capacity obligation against the expected growth in customer base and other factors.

This requirement is being used to fine-tune the IGCEP. The government envisages a cumulative capacity addition of 23,000 MW majority of which will come from Hydel, solar, and local coal. Until 2027, over 60 percent of generation is expected to come from renewable (including hydel).

KE has also submitted its plans which entail the addition of 1,200 MW in renewable energy and almost 2,200 MW overall with the inclusion of local coal. The company expects that peak power demand will go to 5,000 MW in FY30, and the intention is to serve 30 percent of this requirement through renewable generation.

The much-needed addition of renewable energy is expected to bring down the overall cost of generation, which is critical to bringing back affordability. The work on connecting the KKI Grid to enable the offtake of additional electricity from the National Grid is in progress. Timely completion of the projects envisioned in the IGCEP, especially the hydel power plants, is critical to benefit the end customer.

However, without additional investment in the T&D network, the benefit of additional generation capacity would dilute. The spent-on T&D is required to ensure full utilization of baseload generation and to accommodate variable addition through renewable energy.

XWDISCOs and KE are also operating in Multi-Year Tariff regimes, which provide them a long-term investment window, and are working on bolstering the system capacity. Meanwhile, KE is awaiting the regulator’s guidance on its Rs484 billion investment plan for the period FY24 to FY30. This will enable further loss reduction to maintain efficiencies in the network.

What is needed with this integrated planning is clear direction and timely implementation. Key elements include the wheeling policies and clarity on the implementation of the CTBCM, which is being deliberated and rolled out sequentially.

Last but not least, the tariff regimes being provided to the distribution companies must account for the kind of fluctuations we have seen in macroeconomic indicators so that the sector can remain steady amid changing circumstances.