$1.5bn per year Saudi oil facility available now: govt

Published June 22, 2021
ISLAMABAD: Minister for Energy Hammad Azhar and Special Assistant to the Prime Minister on Finance Waqar Masood address a press conference on Monday.—Tanveer Shahzad / White Star
ISLAMABAD: Minister for Energy Hammad Azhar and Special Assistant to the Prime Minister on Finance Waqar Masood address a press conference on Monday.—Tanveer Shahzad / White Star

ISLAMABAD: The government on Monday announced the availability of $1.5 billion Saudi oil facility per annum and approval of the principles for national electricity policy with consensus by the Council of Common Interests (CCI).

Speaking at a joint news conference with Energy Minister Hammad Azhar, Special Assistant to the Prime Minister (SAPM) on Revenue and Finance Dr Waqar Masood Khan said that announcement had been made for $1.5bn per annum oil supplies from Saudi Arabia on deferred payments.

However, he declined to talk further about details of the oil facility and the reasons behind its reduction from $3bn originally agreed about three years ago which could not be effectively implemented amid cracks in bilateral relations.

The SAPM said the government had made very realistic estimates about collection of Rs610bn petroleum levy during the next fiscal year even though some critics were terming it unrealistic and claimed the levy would have to be increased to Rs25 from Rs4-5 per litre at present.

CCI approves principles for national electricity policy with consensus

He said the government had kept the prices of petroleum products stable for about four months even though international prices had gone up significantly. “We have set these targets on the basis of potential of this sector and expected developments,” he said, adding there might be some difficulties at the start of the next fiscal year but these would subside going forward.

Dr Waqar said the lifting of sanctions on Iran would help it increase production which would have very positive impact on prices.

He said other revenue estimates were also realistic and there were 25 other heads that had not been taken into account while finalising the next year’s budget. He said the government had targeted privatisation of only LNG-based power plants, but there were many other transactions which could be completed next year, in addition to the launch of 5th generation telecommunication licences and renewal of the existing ones.

Energy Minister Hammad Azhar said it was an historic day that the CCI had approved the national electricity policy with consensus that set the stage for induction of future power generation capacity on the basic principle of least cost, localisation of fuel and through open and transparent bidding.

He said the policy approved guiding principles under which a number of sub-policies would be developed and made part of the overall national power plan.

He said the policy would be released soon but generally it had set targets for renewable energy projects and hydropower generation with a long-term view as the policy would remain in place for 10 years. Separate targets have also been set for government-to-government projects of strategic nature.

The minister said the successive governments had been aiming for the kind of policy approved by the CCI on Monday but failed to deliver due to various reasons better known to them. He said the provinces also agreed with the federal government for operations against electricity theft and recovery of bills because there were some areas where 70pc electricity was going into losses.

Mr Azhar criticised the previous governments for inducting generation capacity with short-term objectives of one-year and two-year shortage that shifted reliance on imported fuel which had serious foreign exchange ramifications. He said the policy would have 10-12 years’ target to be covered in the indicative generation capacity expansion plan.

Besides generation, he said, the policy also covered distribution and transmission sectors because the previous government had lined up thousands of megawatts of generation capacity that could not be effectively transmitted and distributed and instead resulted in capacity payments and circular debt.

The new policy, the minister said, was developed through extensive consultations with the provinces and other stakeholders with the vision of universal access to electricity through self-sustainable power sector and its provision to all consumers at affordable rates, commensurating with their ability to pay.

The policy also envisages energy security in terms of uninterrupted supply of electricity through localisation and fuel diversification of energy resources and infrastructural resilience and makes it sustainable through minimisation of environmental degradation and progressive elimination of circular debt leading to financial self-sustainability.

Mr Azhar said the key guiding principles of the policy included efficiency, transparency, competition, financial viability, technology and fuel indigenisation, research and development and environmental responsibility. He said the transmission sector planning would be integrated with generation planning in coordination with national and provincial grid companies for transmission expansion. On top of that, the national electricity policy would also have a distribution investment plan to align with generation and transmission expansion planning.

The minister said the provincial governments agreed to provide support to power companies and the federal government through legal procedures, recoveries, collections and anti-theft measures, besides development and operationalisation of strategic roadmap for distribution companies.

The policy also envisages principle of safe, reliable, non-discriminatory and economic dispatch, restructuring of system operator and upgrade of technology and institutionalisation of IT-based system market operations. The policy seeks alignment of generation tariff with consumer tariff and timely recovery of costs, uniform tariff for state-owned distribution companies and K-Electric, coupled with well targeted subsidies and concession package to incentives for additional consumption.

The policy promises integration of sectoral planning with energy value chain through procurement and infrastructure expansion in line with generation and transmission expansion plans while enabling regional (including K-Electric) integration and export orientation, besides electrification across the country, including rural areas, through on-grid and off-grid approaches.

The next step will be the preparation of a five-year national electricity plan with 15 years’ perspective and specific frameworks under particular sub-sectors to facilitate implementation. The Power Division will be responsible for monitoring the policy’s implementation and report to the CCI on an annual basis.

Published in Dawn, June 22nd, 2021

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