ELECTRICITY consumers currently bear a burden of around Rs2 trillion annually as capacity charges that are paid to independent power producers (IPPs) for the energy that is not used. In even simpler terms, the IPPs have the capacity to produce, but we do not have the capacity to consume. We are paying for our inability to consume power. Howsoever contradictory it may sound, the fact is that the menace of extended loadshedding is not because of lack of power; it is because of surplus power that remains unused.

In fact, to mitigate this undue financial burden, measures should be taken to optimise the use of these power plants. For instance, the usage of indigenous gas for power-generation should be made mandatory, replacing the expensive liquefied natural gas (LNG), and its continuous supply must be ensured. This measure alone, say, will slash the tariff significantly by 15-20 per cent.

Besides, the inverted tariff formula — ‘higher tariff for higher usage’ — being applied currently by all the power distribution companies (Discos) needs

to be revised. There should be a flat-rate tariff, and the consumers should be encouraged to do away with imported gas usage and, instead, use electricity for cooking and heating purposes.

Besides, if the per-unit electricity rate is decreased significantly, the consumers will automatically switch over to electricity usage. This will lower the amount being spent on importing gas, and, simultaneously, consume the surplus power. The issue of capacity charges will thus be resolved to a large extent, bringing much relief to the consumers.

Ejaz B Durrani
Ex-Director, Pakistan Electric
Power Company
Lahore

Published in Dawn, April 21st, 2024

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