THE government, undoubtedly, would like to call them ‘teething troubles’, but there is mounting evidence that the power sector is slowly being engulfed by uncertainty following the commissioning of the new RLNG generation plants. First came the large-scale shutdowns from Nov 2 to Nov 7, which were partially attributed to the smog causing tripping, but in equal measure were a result of the transmission system being unable to maintain stability in a lower-supply scenario, as well as disruptions in the supply of gas. Now we have another bout of load-shedding in some swathes of the country, once again owing in large measure to a decrease in gas supply, with orders sent to the new power plants to plan for sharp reductions. Along the way, we have seen orders to shut down furnace oil power plants that have caused a near-crisis situation in the oil supply chain as depots and refineries are choked with large stocks of the dirty fuel with no offtake.

It turns out that switching from oil- to gas-based generation involves some complexity that the government had not foreseen. It also turns out that upgrading the transmission system to accommodate enhanced generation and the dispatch of electricity places larger demands on system stability that were not properly planned for. Next to come are the unforeseen financial consequences since the billing and recovery mechanisms have not been reformed to keep pace with the larger number of units that will be sent out. After that, we will see the macroeconomic consequences once debt service and profit repatriation on the projects begins, placing a strain on an already depleted stockpile of foreign exchange reserves. In short, with the enhanced capacity having just been activated and the government unprepared, we are beginning to witness the consequences of a plan that focused excessively on adding raw megawatts to the system. Perhaps these issues will be sorted out with the passage of time, and in hindsight will, indeed, appear as little more than ‘teething troubles’. But the difficulties of managing the enhanced generation raise fears that the larger consequences of the added megawattage with no attendant reforms will show up in the circular debt and the consumer tariff. The government has its task cut out for it to ensure that the fruits of its success do not become an emblem of its own failures.

Published in Dawn, November 25th, 2017