Pakistan’s energy sector is going through severe crisis as the power sector’s receivables against various consumers including provincial governments, federal government, and private sector have crossed Rs2.5 trillion.
This was stated by Tahir Basharat Cheema, former managing director (MD) Pakistan Electric Power Company (PEPCO), while addressing the launch ceremony of a book titled, “Power Sector an Enigma With No Easy Solution” organised by the Pakistan Institute of Development Economic (PIDE), here Tuesday.
Besides others, the event was also attended by Federal Minister for Energy (Power Division), Khurram Dastgir Khan.
While introducing the book, Dr Nadeemul Haque, vice chancellor (VC), PIDE said that to research and find solutions to the long-standing energy sector problems, PIDE formed a “PIDE Power Commission”. The commission comprises power sector experts with decades-long experience in the sector. The book provides deep insights into various segments of the power sector and suggests workable, sustainable, and integrated solutions to the power sector woes.
Haque said Pakistan had suffered a lot because of the energy crisis for many years. Circular debt has been hurting Pakistan for 15 years or so. Pakistan has incurred massive losses and cumulated loss of more than Rs5 trillion. It is time to take the matter seriously. This book is an effort from our side, he said.
Khurram Dastgir Khan said a policy has been adopted to generate electricity from cheaper sources and up to 10,000 megawatts will be generated from solar power in different areas of the country.
“During the recent floods in the country, we did not let electricity become a problem and ensured power supply in all affected areas,” he mentioned. He said that in the future, all power-generating plants in the country would be planned on local fuel. The foreign exchange would be saved by reducing the consumption of imported oil, furnace oil, and coal.
The minister said that Pakistan’s electricity demand in the summer season reaches 30,000 megawatts which is in line with the installed capacity and electricity demand in winter remains below 12,000 megawatts, so the country is facing a serious technical challenge as various plants in winter are not operating but are getting capacity payments for their plants, which is adding to financial woes.
He said to deal with the above issues “the government could bring some kind of legislation to resolve issues. Energy efficiency forensic audit of the plants is also required. Pakistan has enough electricity but inefficient not cheap”. Renewable energy with 10,000 megawatts capacity will be replaced with the current one. In February work on the first plant with 600 megawatts capacity will be started.
To improve the quality of billing is also a must and the government is working on it, which will first be introduced in the industry sector followed by the commercial sector. Governance enforcement to collect bills is also required in Khyber-Pakhtunkhwa, Baluchistan, and Sindh areas. Unbundling of Wapda has not resolved the problems.
The minister said that to resolve over-billing related problems the government is to introduce advanced metering infrastructure (AMI) in the power sector. Furthermore, the transmission system will be improved.
The minister said that it is a fact that the country has plenty of expensive electricity, but the government does not have plenty of cheap electricity. The challenges for Pakistan are many, all power sector-related issues mentioned in this book are correct and the country should address these issues on which the Ministry of Energy is working.
He further added that the government is working fast on eco-friendly and affordable power generation projects that will yield far-reaching results. He said that the Shanghai Electric Power Project of 1,320MW would start production next month that would run on Thar coal and provide cheaper electricity.
The federal minister said that to check expensive rates, the government is trying to find cheaper resources that can generate electricity from Rs7 to Rs8 per unit to reduce the burden on the common man.
To speed up the development journey, local coal, water, wind, and solar power generation projects are being promoted.
Earlier, Basharat Cheema,while presenting an overview of the book said that the PIDE has gone into power sector history and every power supply chain segment to find the current crisis’s root. It covers generation problems, transmission constraints, and noncompliance with industry codes leading to unreliable power supplies, distribution side challenges, and weaknesses in the regulatory structure. It has discussed in detail the inefficiencies in the existing tariff design.
Furthermore, it argued that a lack of adequate planning and a comprehensive policy over the years had taken us to the stage where we are today. Various departments in the energy sector are less-oriented toward delivery; they lack resources and have outdated techniques and procedures.
Cheema said that during last year, 700 interruptions were reported in the main power transmission lines as a result 50,000 transformers were damaged. He said that one of the key problems being faced by the power sector is the governance crisis as a result in the past 20 years, the country failed to address the issues as a result massive circular debt was created. The government should appoint professional people in the power sector companies with ensuring their tenure.
In the last 20 years, we failed to tackle the situation, now there is a need for a forensic audit of the IPPs, these plants are considered over invoiced. Professional people must be appointed in operational management with ensuring tenure term. Privatisation has many problems as regularity bodies are not performing well, under such a situation, privatisation will not work.
He said that Power Distribution Companies (Discos) could be fixed instead of transferring power sector to provinces. Innovative tariff should be introduced, with separate tariff for night and daytime. Like Economic Advisory Council, a Power Sector Advisory Council should be formulated with relevant experts. Current power sector billing system is flawed and must be rationalise, he concluded.
Apart from providing deep insights into various segments of the power sector, this book has suggested workable, sustainable, and integrated solutions to all the power sector’s perennial difficulties. For instance, the book talked about decentralizing power for better management and making companies accountable for their decisions. Further, it suggested strengthening human resources at all levels through independent professional management and human resource development. It advocated for the mandatory listing of the DISCOs on the stock exchange with a limit of five per cent maximum by one shareholder.
The book suggested the forensic audit of both public and private generation companies immediately, followed by recoveries without any relaxation for any IPPs, and asks for a complete halt on sovereign guarantees to investors in the future. It asks for a complete revamp of tariff design and to start the market with bilateral contracts keeping transmission constraints and participants’ capacities in mind. It urges the adoption of technology, such as pre-paid smart meters, to solve many of the power sector problems. Among many other suggestions, the book recommended forming a Power Commission comprising committed power sector professionals to guide and monitor the reform process in the sector.
The members of the PIDE Power Commission including Engr Salis Usman, General Manager Power Planning, NTDC; Engr Mujahid Islam Billah, Ex CEO, FESCO; Basharat Ali, CFO, PEPCO; Engr Sajad Haider Syed, Dy Manager, NTDC; Engr Masood Akhtar, Former GM, NPCC; Engr Azhar Iqbal, Director Finance, PEPCO; Engr Adnan Riaz Mir, GM, Monitoring, PP&MC; and Engr Abdul Qadeer Khan, Ex GM, NPCC, were also present at the event.