The Nawaz Sharif government’s plan to end rolling power blackouts from the country — especially from its powerbase, Punjab — through new build-ins and plant conversions before the next elections is feared to have gone off course.

Several projects may miss their deadlines, original and revised, for one reason or the other.

The feared delay in the completion of the projects is naturally making the government anxious, and its nervousness was recently betrayed by the sudden resignation of previous Wapda chairman Zafar Mahmood followed by Neelum Jhelum Hydropower Project chief executive officer Mohammad Zubair.

“Unless the government addresses the real issues facing the power sector, it will only be inflating its problems by adding more generation to the system”

As if these resignations were not enough to convey the government’s anxiety, the statement by Shamsuddin Sheikh, chief executive of the Sindh Engro Coal Mining Company - a joint venture of the Sindh government and Engro Powergen building 6x660MW coal-fired power stations in Thar - that the government was putting pressure on them for moving forward the deadline for their first unit before the elections, which are two years from now, was indicative of the growing desperation of the authorities to deliver on their promise.

The company said its first unit will not become operational in early 2019.

The PML-N government has implemented several initiatives, including payment of unpaid bills of Rs480bn to the power producers and fuel suppliers besides exorbitantly increasing electricity prices (to recover cost of generation), launching new generation projects and improving the transmission and distribution network; in order to eliminate blackouts ever since it returned to power for the third term in 2013.

Currently, the government is targeting plant conversions (including conversion of Guddu and Nandipur to gas) and new build-ins (including two coal power plants in Sahiwal and Port Qasim, three gas-fired plants in Bhikki, Haveli, Bahadur Shah and Balloki, two nuclear plants, Neelum-Jhelum Hydropower project and Tarbela-IV extension) to bring more than 10,000MW of electricity into the national grid before summer 2018.

Overall, a water and power ministry order capping new generation on imported fuels in June said the energy projects already under construction will bring in 13,207MW of new generation capacity by end-2018. Power generation already financed and under various stages of execution will bring a further capacity of 20,380MW by 2022, raising the total installed capacity to 53,405MW (from existing capacity of above 24,000MW).

But the reports of significant delays in the completion of Neelum Jhelum and Tarbela projects, as well as supply of high efficiency gas turbines by GE for the RLNG-fired plants, have cast doubts over the government’s plan to deliver on its promise. Transportation of coal to the power plant in Sahiwal is being viewed as a major problem for its timely commissioning. Energy experts aren’t very optimistic about scheduled commission of other projects either.

“The devil lies in details. The possibility of an addition of 10,000MW of new generation to the system in the next two years appears quite bleak to me,” the chief executive of an independent power producer, who spoke on condition of anonymity because of the sensitive nature of the matter, said.

“Even if the authorities overcome the snags in the way of the completion of these projects, the chances are it will continue to enforce blackouts because of the distribution companies’ inability to recover their bills, plug electricity thefts and cut system losses.”

According to a Nepra report, at least a quarter of electricity generated in the country is lost in the system or stolen. The unrecovered bills of the discos amounted to a staggering Rs684bn last month with the government owing Rs300bn to power producers and fuel suppliers despite a 27pc reduction in fuel prices, according to a report published in this newspaper last month.

“In spite of a substantial reduction in global fuel prices, the government is not using the available generation capacity to the optimal level and is enforcing power blackouts because distribution companies are not able to fully recover their bills,” the anonymous CEO said.

Others agree. “Increasing your generation capacity for political mileage during the next elections without reforming the power sector in its entirety could prove counterproductive. If you cannot reduce your system losses and recover the bills, you will avoid optimal use of the installed capacity because more generation would mean a bigger (fiscal) deficit (for government),” a senior executive of another power company explained.

“The partial generation capacity utilisation will only increase the cost of electricity for consumers because of high fixed costs, debt servicing and capacity charges to be paid to the power firms. What is the use of having more generation if you do not want to use it and consumers cannot afford it?” he asked. “Unless the government addresses the real issues facing the power sector, it will only be inflating its problems by adding more generation to the system”.

Published in Dawn, Business & Finance weekly, September 12th, 2016