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Flawed energy policy

It is an accepted fact now that the National Energy Policy 2013-2018 is merely a policy statement. Or, at best, it is the policy strategy, as declared in the document too, which is void of any implementation plans and institutional framework. For this reason, “Previous policy frameworks (such as 2002 power policy) may also continue to be operational”, as per the document. So, what is new?

Actions of the government during the first four months of its governance demonstrate that political will and commitment to resolve the issues of ailing power sector is lacking. For instance, it was expected that an integrated energy policy would be launched to address massive and persistent loadshedding of electricity and natural gas, and, of course, ever-increasing oil import bill. This would have been in line with the election manifesto of the ruling party as well. Sadly, this did not happen.

The government’s focus is on recovery of full cost of electricity from consumers through rationalisation of prices for different consumers. The objective is total elimination of subsidies being extended to power sector till recently. As a first step, power tariff was increased up to 74% for industrial and commercial consumers effective 1st August. Again, the government recently announced sharp increases, up to 65%, in electricity rates for domestic consumers across the country. Ironically, the Policy promises “to provide much needed relief to the citizens of Pakistan”. Pakistan already has one of the highest electricity tariffs in the region, which stands in the range of Cents 14-19 per kWh unit for domestic consumers, for example. Comparatively, India has an average rate of about cents 7, Bangladesh cents 8 and Nepal cents 9 per unit.

It is claimed that by 2017, the supply-demand gap could be eradicated completely and the country could rather be a regional exporter of power. In reality, however, there has been no respite from massive electricity loadshedding as currently the shortfall remains in the range of 3,000 to 4,000 MW. This is in spite of clearing circular debt resulting in supply of another 1,700 MW, addition of 300 MW power generation capacity by new hydroelectric and wind power plants to national grid, and, above all, lesser demand due to weather change. Meanwhile, the circular debt has re-surfaced, to the level of about Rs 200 billion. In the words of former Federal Minister for Petroleum and Natural Resources Dr Asim Hussain, ‘worse days are still ahead’.

Privatisation of electricity generation and distribution companies is on the cards instead of making them efficient and profitable through restructuring as envisaged in the Policy. The Cabinet Committee for Privatisation has already decided to divest 31 state-owned enterprises (SOEs) in the first phase. The list includes divestment of electricity distribution companies (Discos) such as Islamabad Electric Supply Co (IESCO), Faisalabad Electric Supply Co (FESCO) and Hyderabad Electric Supply Co (HESCO). Other energy-related organisations to be privatised on priority include Oil and Gas Development Co (OGDCL), Pakistan State Oil (PSO), Pakistan Petroleum Ltd (PPL), Sui Northern Gas Pipelines Ltd (SNGPL), Sui Southern Gas Co Ltd (SSGCL) and Mari Petroleum Co. It is not difficult to visualise the future scenario of power sector if all these state entities and power generation companies (GENCOs) are privatised.

Interestingly, there is fast development with regard to Gadani Power Park project of cumulative capacity of 6,600 MW based on imported coal and conversion of existing RFO-based power plants, also on imported coal. The goals outlined in the Policy however boast “generation of inexpensive and affordable electricity by using indigenous resources such as coal (Thar coal) and hydel”. What a dilemma! Development of Thar coalfields for mining and power generation has been put on the back burner, which was the main feature of the 16-point Energy Security Policy announced by the PML (N) in March this year, promising setting up of at least 5,000MW of coal-fired power plants in Sindh within five years.

One of the key targets of the policy is to decrease cost of power generation from the existing “12 cents per unit to 10 cents per unit by 2017”. Federal Information Minister Pervez Rashid on 3rd October has already belied the goal-scoring of the policy saying that generation of cheap electricity could only be possible after 8-9 years. National Power Policy 2013-18 is being described as a strategy lacking in the vision and plan for future insofar as development of non-conventional, alternate and renewable energy (excluding hydropower) resources is concerned. Power generation based on small hydropower, solar, biomass, wind and tidal is an important area, capable to produce clean, environmental-friendly, unlimited, and, most importantly, affordable electricity at a large scale.

Huge potential for harnessing these indigenous resources exists across the country. Alas, emphasis has not been laid in optimal and speedy exploitation of these renewable energy resources that has potential to provide solution to the prevalent power crisis. Energy generation based on renewable energy resources already accounts for about one-fifth of global power generation capacity. There is therefore a need to give policy directive for encouraging promotion of these indigenous resources too, in line with the neighbouring countries, like India and China, where such resources are being rapidly harnessed economically. India has a full-fledged Ministry of New and Renewable Energy; the only of such kind of ministry the world over, and the country has made tremendous progress in the field in the last few years.

The government will create a culture of energy conservation and responsibility, the Policy document says. But the strategic plan to achieve the objective is nothing but the 10-year-old formula of providing energy savers to the domestic consumers that was coined by Pervez Musharraf and has failed. The envisaged savings to the level of 1,000 MW annually were therefore not achieved in past years and would not be possible to attain under the Policy given the conditions of poor governance. In final analysis, the government’s resolve to address energy crisis in short, medium and long term appears to be too vague and not meeting the aspirations of nation. The Policy is simply a political gimmick that has already been exposed to the masses.

(The writer is former Chairman of State Engineering Corporation, Ministry of Industries and Production)

Engineer Hussain Ahmad Siddiqui, "Flawed energy policy," Business recorder. 2013-10-23.
Keywords: Social sciences , Social issues , Social needs , Social crisis , Social problems , Power crises , Natural resources , Energy policy , Energy shortfall , Pakistan , IESCO , PSO , SSGCL