SURPLUS generating capacity, heavy losses, mismanagement and inefficiency of our power sector have made electricity very expensive and Pakistani products non-competitive in the international market.
For example, in 2017 installed capacity of power plants connected with National Transmission and Despatch Company’s power system was over 28,000 MW. Those plants had electricity generating capability of about 190 kilo Watts hour (kWh), but only 108 billion kWh were procured in that year.
The purchase price included the fixed cost of investment called Capacity Purchase Price (CPP) of Rs440 billion, payable regardless of the procured kWh. The point is that, by paying fixed CPP and procuring far less electricity than the generating capability, the power sector suffered a huge loss. Furthermore, only 87 billion kWh were delivered to electricity consumers, losing 21 billion kWh in transmission and distribution systems.
Additional losses were suffered due to theft and unrecoverable or disputed electricity bills. While all losses were passed on to consumers, excise duty, TV fee, GST, NJS, FC surcharge and TR surcharge were also imposed on their electricity bills. In spite of all that, there was still a huge circular debt to be reckoned with, a totally unsustainable situation.
As the installed capacity of the power sector is rapidly increasing, the surplus capacity and losses are going to rise, and the sad state of the power sector will further worsen. At present the installed capacity is about 34,000 MW, far more than the peak demand, and under construction power plants are expected to add over 12,000 MW in next few years.
That means the power sector will have surplus power for a long time, because demand growth is very slow. There may not be any quick fix, but at the very least, the government can stop awarding new construction contracts for power plants for the time being.
In the meantime, a team of qualified and experienced utility planers may be tasked to review performance of the power sector, to prepare a reasonable demand forecast, to develop a sustainable power sector expansion plan.
Muhammad Akram Khan
Published in Dawn, February 11th, 2019