Targeting SDG 7

July 29, 2019

Email

The writer specialises in energy policy and political economy. He would like to thank Saadia Qayyum for her contribution to this article.
The writer specialises in energy policy and political economy. He would like to thank Saadia Qayyum for her contribution to this article.

THE United Nations member states adopted the 2030 Agenda for Sustainable Development in 2015. A set of 17 Sustainable Development Goals laid the foundation for global partnership to develop strategies for shared prosperity. Among them, SDG 7 aims to provide universal access to reliable modern energy services at affordable prices. For Pakistan to achieve this goal by 2030, a set of urgent policy measures is needed.

According to the 2017 census, there are over 32 million households in Pakistan. These households are served by nearly 23m connections, equivalent to a grid electricity access rate of 72 per cent. This means that at a population growth rate of 2pc per annum, at least 101m people will have to be provided electricity services by 2030 to achieve SDG 7. The need to address the challenge is reinforced by the fact that the majority of unserved households are in rural areas and urban slums. As per the power regulator’s estimates, 32,000 villages were not connected to the electricity grid as of 2017. A closer look reveals more disturbing regional disparities.

Sindh has the highest number of unelectrified villages, followed by Punjab, KP and Balochistan. In terms of electrification rates, Balochistan lags far behind the rest at only 25pc. The situation is not better elsewhere as KP and Sindh have 66pc electrification rate each while 27pc of Punjab’s households — most of which are concentrated in the southern part — don’t have grid electricity. Notably, connection to the grid does not equate to reliable electricity service. Majority of villages, officially listed as electrified, continue to experience 12 to 16 hours of blackouts. Analysts estimate that two-thirds of Pakistan’s population is living in unserved or underserved areas for electricity.

It’s not too late to reassess our policy choices for ensuring universal access to electricity services by 2030.

There are two broad categories of available solutions in this regard: grid-supplied electricity and off-grid systems/applications. The latter differs broadly in scope. For instance, an off-grid solution can range from a solar lantern of sub-watt category to an isolated micro-grid with several megawatts of power generation capacity serving hundreds of households and businesses. These solutions have their respective advantages and limitations. It seems, however, that our policymakers have an unwarranted bias to promote grid extension due to its political mileage without carefully assessing economic and technological parameters of the various alternatives.

Over the last 10 years, tens of thousands of power connections were sanctioned in the country. To achieve the SDG 7 target through grid electricity, we’d need to provide millions of new domestic connections, requiring an estimated $10 billion to build the necessary transmission and distribution infrastructure due largely to the low and fragmented population density in our rural settlements. Moreover, lower income levels of these households limit their purchasing power, which could continue inflating the annual amount of government subsidies and eroding the finances of state-owned power companies.

Alternatively, a set of off-grid solutions can be offered depending on specific needs of unelectrified households. Take the case of a rural settlement of a few households scattered in Balochistan whose electricity demand is limited to lighting and cooling. It makes sense to offer them stand-alone solar home systems (SHS). On the other hand, a rural community in Thar with dozens of households needs a mini-grid to meet their electricity demand for residential and commercial needs. Simplicity, scalability and economic resource optimisation would become the design principles of this approach.

In terms of the policy mandate, following the 18th Amendment, the provincial governments have assumed a proactive role in implementing energy projects. The efforts range from handing out free SHSs to setting up mini-grids. The Energy Department of Punjab developed a hybrid solar and wind mini-grid project in district Khushab with funding from the Asian Development Bank. The Pakhtunkhwa Energy Development Organisation has a comprehensive plan to instal 300 micro-hydro plants in the province. The ownership is transferred to local communities who will collect bills to cover running cost through a project’s operational life.

The absence of official statistics on the number of beneficiaries of SHSs and mini-grids makes it difficult to quantify the impact of these programmes. It’s equally challenging to find a consolidated picture of public and private-sector initiatives in the country. Despite several efforts launched from time to time, unelectrified households bear a cost of $2-3bn per annum on alternative lighting products or services such as kerosene oil, gas lights, and battery-powered torches.

Unfortunately, no provincial or federal government has introduced a long-term plan on how it aims to achieve the SDG 7 objectives. The International Renewable Energy Agency argues that by targeting SDG 7 through renewable energy deployment, governments can realise several other key goals, including health (SDG 3), jobs and economic growth (SDG 8), sustainable cities (SDG 11) and climate action (SDG 13). As the federal and provincial governments continue implementing various poverty alleviation programmes, their policy choices for the provision of electricity services can play a key role in this regard.

The financial woes of our state-owned power companies are no secret. The circular debt has brought the whole power sector to the brink of collapse more than once. More importantly, the unfavorable economics of rural electrification through grid extension will not change dramatically by 2030. Our policymakers would be better advised to develop a national plan for universal access to electricity, relying mainly on renewables, that lays down basic principles and can be tailored according to the needs of the federating units.

To start with, it’s necessary to encourage private sector endeavours. Evidence suggests that the distribution of SHSs for free or government-led mini-grid projects disincentivise private investors and deliver sub-optimal outcomes. The available public resources would be better utilised to develop financing and policy tools which target the creation of a market for off-grid electricity solutions. Our public authorities should cut back their role as a market player and focus on the creation of a marketplace and ensure its sustained functioning for the common good.

The writer specialises in energy policy and political economy. He would like to thank Saadia Qayyum for her contribution to this article.

Twitter: @sohaibrmalik

Published in Dawn, July 29th, 2019