PICTURE a country with 12-hour power outages every day. Such is the story of 144 million people in Pakistan that make up more than 65pc of its population. A nation that started out on energy sector reforms in 2007 alongside countries like Turkey and the Philippines now suffers up to $15 billion in losses to the economy while Turkey trumps an alternative highway of energy supply to Europe.
Our dependence on imported fuel to generate electricity did not sustain the shock of rising prices, and unsustainable government subsidies have thus far cost the exchequer more than $20bn among other problems.
Worsening crisis of recent years has given way to urgency among industrialists and stakeholders on diversifying the country’s energy mix. Solar power has emerged as a popular answer to the growing deficit. The Pakistan Economic Forum claims that if industry were to utilise a modest 17.1pc of today’s technological efficiency and 1pc of the 770 billion square metres in total available space, we could generate more than 300,000 MW of electricity. This is a game changer in times where current capacity deprives every 35 of 100 individuals.
A workable model must centre on private-sector initiatives.
Pakistan’s energy layout is roughly drawn in the ratio 53:47 on-grid to off-grid. While on-grid continues to be the focal point of government action on power distribution to already served areas, off-grid presents almost 40,000 villages consisting of 69 million people who do not receive any form of power from present capacity.
These people often use alternative equipment such as harmful kerosene lamps, alkaline battery lights, candles and torches to meet their daily requirement. This along with mobile phone charging in nearby towns at Rs20 per charge approximates to an annual off-grid spend of around $1.2bn. There is also an estimated on-grid spend of $1.1bn every year because of power outages and interrupted energy supply to connected communities.
The advent of technology has made it easier than ever to move down the socioeconomic pyramid and present sustainable energy solutions to improve standards of living. The East African experience shows a massive upsurge in solar-powered lighting and household solutions in recent years with companies serving millions of customers. M-Kopa alone has added over 300,000 Kenyans to its customer base in three years. We have only to see regional counterparts to witness palpable empowerment brought about by solar-based lighting solutions in off-grid areas. Bangladesh and India are prime examples of a thriving solar products industry.
Grameen Shakti in Bangladesh has seen laudable success with 1.5 million system installations across the country, serving more than eight million people. The Bangladeshi government operates a public-private partnership model whereby it sets equipment standards, offers cost of equipment financing and capacity building for partner organisations.
The approach ensures higher likelihood of good quality products in collaboration with the private sector. There is also the refinancing facility that covers partners for up to 70pc of the cost of equipment making sure that organisations remain interested through project viability while having skin in the game.
A workable model in Pakistan will have to centre on private-sector initiatives to balance the government’s attention on the on-grid. Given cost imperatives, solar power will always constitute a small percentage of the total energy mix, making it suitable for the unserved population that cannot viably be brought onto the grid. What we need is an industry association.
The right ingredients are in place by way of microfinance institutions with a rural footprint, the foray of certified vendors, and importantly, demand from customers. Like the financial services sector that has seen transformational change through branchless banking, Pakistan is in need of a disruptive solution like Africa’s M-Kopa to revolutionise the power industry.
The A-grid of challenges identified in the path of progress towards solarisation constitutes awareness, accessibility, acceptance and action. Wholesome initiatives such as the IFC’s Lighting Pakistan programme to educate customers, engage vendors with local distribution, and loop in financing practitioners are the sort of action required of the private sector to power one home, one village, one province at a time.
A number of products can be introduced to cater to the needs of the off-grid market. Products can be packaged into solutions to suit the requirement of customers. These can be designed so that they run the community tube well during the day and power communal village lights at night. Solutions can also be designed along a range of simple to complex powering capacity, catering to basic housing needs of light bulb, fan and mobile charger in its simplest form, and advance to power for televisions, fridges and portable air conditioners.
A consortium of solar power players is required on an immediate basis to call upon the infinite renewability of nature’s energy, and formulate affordable and effectively distributional solutions for the country.
The writer is chairman, Pakistan Microfinance Network.
Published in Dawn, April 14th, 2016