ISLAMABAD: The much-awaited National Energy Policy 2013-18 has been formulated by the government and would be presented in the Council of Common Interest (CCI) on Tuesday for final approval.
The policy aims at achieving the goals of social development and prosperity for the country, highlighted earlier as ‘Roshan Pakistan’ in Pakistan Muslim Leage-Nawaz’s (PML-N) manifesto.
Under the policy, power sector subsidy would be phased out till an end to it, while an end to load shedding would be made possible till 2017 and surplus electricity in 2018. Privatisation of government owned power plants and few power distributing companies (Discos), bringing the double digit cost of power generation to a single digit, restructuring of water and power ministry, National Electric Power Regulatory Authority (Nepra), Oil and Gas Regulatory Authority (Ogra) adjustment of outstanding dues owned by the government owned and privately owned bodies through federal adjusters, and formation of regional transmission and power trading system would be made.
Available draft copy of National Energy Policy 2013-18 with DawnNews has disclosed that Pakistan’s Ministry of Water and Power had developed this energy policy to support the current and future energy needs of the country.
Highlighting the challenges faced by the ailing energy sector of the country, the new policy says that Pakistan’s power sector is currently afflicted by a number of challenges that have led to a crisis: A yawning supply-demand gap where the demand for electricity far outstrips the current generation capacity (up to 4500-5000mw). Highly expensive generation of electricity (Rs12/unit) is due to an increased dependence on expensive thermal fuel sources (44 per cent of total generation). A terribly inefficient power transmission and distribution system that currently records losses of 25 to 28pc due to poor infrastructure, mismanagement and theft of electricity.
Long Term Goals
The new energy policy aims to build a power generation capacity that can meet Pakistan’s energy needs in a sustainable manner. The policy also aims to create a culture of energy conservation and responsibility, ensure the generation of inexpensive and affordable electricity for domestic, commercial and industrial use, minimise pilferage and adulteration in fuel supply and promote world-class efficiency in power generation. It further envisages creating a cutting edge transmission network, minimising financial losses across the system and aligning the ministries involved in the energy sector and improve governance.
However, the policy also mentioned that ‘a clear strategy has to be articulated for each of the aforementioned goals in order to actualise the power sector’s aspirations’.
The policy also disclosed that efficiency would be predicted on three pillars of merit order, transparency/automation, and accountability. Similarly, competition will be built on three pillars: upfront tariff and competitive bidding, and key client management.
Infrastructure will be developed and incentives provided to attract greater private sector investments. The government will set the foundations of energy cities and corridors and sponsor public-private partnership for coal and run of river projects. The government will also redesign and strengthen the national grid transmission network and build a regional transmission and power trading system. The government would like to limit its role to policy making and unless necessary, service delivery will be promoted through a fiercely competitive and transparent private sector.
The tariff and competitive bidding process will be controlled by a world-class regulatory authority. Up-front tariffs will be set for low cost fuel and competitive bidding will be used to decrease the costs further. Similarly, a transparency and competitive process will be established to privatise government assets.
Overall, the strategy to achieve the above goal is focused on attracting and directing local and foreign investments towards rapidly expanding the power generation capacity. Investments can only be encouraged if the sector is made attractive and bankable by treating the subsidy to the abject poor and clearing it out through cross subsidisation mechanisms.
Demand management strategy
“The strategy may impose timing restrictions for evening commercial activities and introduce time of use metering to discourage utilisation during the peak hours by charging different rates for on and off peak timings. Solar and alternative power solution will be encouraged for end users, street lighting, electronic billboards, neon lighting, shop front signage, etc. In addition, the price signal articulated through reducing and targeting subsidy will naturally optimise demand and utilisation,” National Energy Policy 2013-18 reads.
Affordable power strategy
The strategy focuses on shifting Pakistan’s energy mix towards low cost sources such as hydel, gas, coal, nuclear and biomass. Local and foreign investment will aggressively sought for small and medium size run of river hydel projects. Selected hydel projects under development will be positioned for privatisation. Multilateral agencies will be invited to partner in large infrastructure hydel projects.
LNG terminals will be developed in close collaboration with friendly countries such as China. Development of coastal energy corridors based upon imported coal (mixed later with local coal), rapid proliferation of coal mining all across the country-especially at Thar and conversion of expensive RFO (residual fuel oil) based plants to coal are the central tenets of coal policy. The proposed strategy will change the energy mix of Pakistan in favour of low cost sources and significantly reduce the burden of energy to the end consumer.