Incorrect diagnosis is at times, worse than no diagnosis at all. More so, if the diagnosis also leads to prescriptions being used. The government ministers, in a star-studded presser, announced a national energy conservation policy, in light of the crisis Pakistan faces today. The plan, if implemented, is slated to save all of Rs62 billion over 12 months.
Not sure Pakistan’s problems today revolve around saving a few billions in rupees. Another matter is how the federal government will get its political rivals in two provinces on board. Also, another matter is early market closure does more harm than good. Don’t forget the electricity consumption in winter months becomes a fraction of the available dependable capacity. If anything, experts have long been arguing to make use of cases for higher electricity consumption in winter months.
The generation fuel mix is not all that bad in low-consumption months, where nuclear, local coal, and hydel can take care of most of the demand. The commodity supercycle also appears to be behind us. Yes, saving on dollars makes all the sense, given how Pakistan is struggling with import payments and the precarious reserves position. But the overall demand in the system does not stretch the supply side that much, for the government to be thinking of ways to discourage consumption.
Energy conservation is always welcome via the use of efficient appliances – but this is not done through firefighting. The Minister announced how electric fans will be charged higher import duties in a bid to bring electricity consumption down. Pakistan imports no more than 150,000 fans in any given 12-month period at a 20 percent duty. It produces over 2.6 million over 12 months. Good luck making a meaningful contribution.
It was not long ago when the PDM government was pitching ideas to shift the entire industry to the grid. We are now here talking about saving electricity via more judicious use of street lighting, which makes up a colossal 0.3 percent of the country’s total electricity consumption. Pakistan’s energy sector woes are well documented, and they do not center around high demand. The problems are plenty, from inefficient generation to unaffordable tariffs, from high losses to unbudgeted subsidies, and from low evacuation to no accountability. Discouraging consumption is literally the last thing you would want to do with the power sector.
With gas reserves evaporating and a bad pricing policy, the onus will eventually have to shift to the electricity grid. The more megawatts you sell especially to industrial and commercial users, the better off you are. There are dozens of avenues that could help you save Rs62 billion if it has really come down to that. Doing that through a forced reduction in electricity demand is literally the least advisable path to tread.