THIS is with reference to the article ‘Paying the price’ (Aug 8), which I think was a practical demonstration of the saying that statistics can prove anything. However, I strongly feel that, like in most situations, the falling rupee value alone is not the key element behind the country’s power crisis; there are a quite few factors at play here.

Even assuming that the falling rupee value is the major cause, the real trigger was the ‘payment in dollar’ condition incorporated in the contracts with ind- ependent power producers (IPPs). With the rupee value of dollar rising from Rs5 in the 1960s to Rs140-160 in 2019, further rise to the present levels, especially in view of country’s precarious financial position and its disastrous effect on rupee value ought to have been foreseen and guarded against through balanced dr- afting of contracts with the IPPs instead of making contracts simply ‘supplier-friendly’.

With plentiful scope for clean, green and cheap energy through solar, wind as well as hydel sources in the country, the over-dependence on imported fossil-fuel based projects — with even a coal-based power project using imported and not abundant Thar coal — seems a rather reckless move.

Moreover, the present installed capacity is about double the energy that is actually consumed countrywide, while peak demand lies somewhere in between the two. This needlessly burdens the system with capacity payments, and that, too, in dollar terms, against nearly half of the installed capacity which remains unused because of the inability of the present electricity transmission system to handle it, and also due to mandatory loadshedding in localities with low recovery rates. This is pure inefficiency.

As such, the harmful effect of payments for unused capacity could be reduced by encouraging energy use by households as well as industries, but the exact reverse is happening.

Unfortunately, people are suffering due to their inability to pay monstrous power bills, while industries are closing down because of their products becoming uncompetitive in both local and foreign markets.

So, the matter of capacity payments is not really as simple and innocent as the said article would like us to believe. Instead of just re-negotiating the contracts, at least the Pakistanis involved in this massive exploitation must be made to cough up, preferably through plea bargains, a substantial part of the loot.

S.R.H. Hashmi
Karachi

Published in Dawn, August 20th, 2024