Pakistan is beset with serious power problems for the past 25 years. Except during 1996-2003 when the country possessed surplus electricity generated by independent power producers (IPPs) which could not be used fully, there has been extreme shortage.

And in this short period of glut, tens of billions of rupees were doled out to these IPPs for buying electricity not needed by Wapda.

Instead of devising innovative tariffs and opting for necessary strategies to boost sale of electricity, the utility managements then cried hoarse that the issue was surplus power and nothing else.

The 15 IPPs established under 1994 policy and HUBCO (set up under the open policy of 1988 – but debarring the public sector from setting up any new thermal power stations) were only being allowed to operate not to jeopardise any new foreign investment in the country.

Efforts from thence onwards were to focus on availability of affordable power alone.

Not having faith in any one else and considering it as a very viable option, the Power Privatization Infrastructure Board (PPIB) was tasked as the one-window facilitator to arrange for all future private thermal power, in addition to processing of applications for hydro plants.

However, the basic requirements of availability of relevant technical resource were never considered as anything important. And in this age of sub-specialisations, the PPIB has come to be staffed with people who have never worked appropriately in the power sector and nor have any connection with utility management or utility engineering practices. The system of using the services of the POEs (panel of experts) too has not been of any success.

This Board, during the last five years, has been unable to arrange for the needed power resulting in the severe power crisis since May, 2006 onwards. Though the unprecedented load growth and increase in demand has also contributed to the fiasco, the inability of the PPIB has also contributed to it.. During this period, many a times international bidding was considered as the right way to do the things. However, it never happened..

Experts with insight into the working of various entities consider the inability of the Board to deliver on account of two very distinct reasons: non-availability of professional expertise and the severe lack of pressure on the organisation to deliver. All pressure and responsibility of the present crisis in the public’s mind is on Wapda and the KESC and no one else.

Strangely, the government too stands absolved of any responsibility for the continued crunch. On the other hand, had provision of generation capacity been the task of the utilities, the situation would have been different and they would have been forced to improve upon the present generation figures. This dichotomy may hold the key to correction of the situation.

No effort whatsoever has been made to arrange for the most appropriate public-private partnerships. Actually, PPIB is busy enough in dealing with private entrepreneurs alone. Another serious omission evident in the PPIB operations is that none of the experienced foreign players in generation have been attracted to invest. .

Perhaps the exception is the Hubco which is reported to be all set to invest in such projects as a 125 - 425 MW combined cycle plant at Dadu (subject to availability of gas), 225 MW reciprocating engines plant at Narowal near Sialkot and a 60 – 100 MW plant expected to use the as yet long plugged gas at Kandra, (Sindh). .

In order to understand the situation, we need to delve into the dynamics/ reasons for the local, but as yet uninitiated, entrepreneur entering into power generation. Why has the businessman with some other core area of operations thought proper to be a power generator? A little insight would reveal that it is so because power generation is perceived to be a high return yielding business and an area where not many controls are evident.

This outlook is surely not robust. The objectives of the government , the utilities and the upcoming investors are at odds.

Another off-shoot of the apathy is that the earlier goal of arranging IPP power at affordable rates has been silently converted into the quest for power at all costs. This is a direct result of the ongoing crisis with no new generation capacity set up during the last three years. And once an emergency is declared, it is normally seen that all prudent practices are put on hold – advertently or inadvertently.

Then there is also the time when the private sector pitches in to make the proverbial fast buck. All this is more pronounced now, because any prudent policy would be likened to red tape giving a near free-for- all to new players. These investors are not even content with the present very lucrative tariffs and demand much more..

Applications for tariff determination made available by NEPRA to intending interveners reveal as many as six areas where the upcoming IPPs may secure possible back-breaking tariff in the domain of 14 cents per unit on today’s oil price.

Surprisingly, and also having no basis, it is the same in case of alternate energy projects being processed by the AEDB. It is seen that the tariff determined by NEPRA for a wind power project at Gharo, Sindh is 12 cents upfront with the levelised rate at 9.7 cents per unit. Not content with this level, the wind-power sponsors at other sites have since been able to get an increase of 16 per cent through the regulator just a few days ago.

The high tariff are stated to be on account of over-invoicing in generation machinery, the returns on phantom equity at the rate of 15.5 per cent (IRR), the price which we all have to pay by acceptance of trite technology (average of 43 – 45 per cent efficiency against frame-size nine generation machines of 100 MW and above having 55 [per cent efficiency), the negatives because of bad locations,

The huge premium of up to 3.5 per cent on KIBOR rates for loans of the rest of the so-called investments, (while much lower rates are being negotiated by the stronger entrepreneurs) and the highly exorbitant O&M charges are being contemplated.

The present happenings can be likened exactly to the rip-off of 1994 and nothing else. However, the situation can be salvaged if PPIB is somehow made privy to the vast experience and professional expertise besides laying down a very stringent schedule / programme to be implemented.

This would also assist it to focus on the six areas mentioned earlier for arranging comparatively less expensive thermal power which, at least in the near future, is going to be the mainstay of our power generation. Emphasis on ensuring the correct price of the plants, the cost of loan(s), technology to be used and location, the O&M to be charged and lastly the type of fuel needed to run the plants would lead to the lessening of the eventual tariffs. The main consideration for acceptance of a power generator has to be the price per unit produced — the least cost solution and nothing else.

Five out of these six areas are relevant to the wind-based AEDB processed projects. The wind farms in the pipeline may be pulling a fast one on us, specially when we see that the prices akin to those of the off-shore wind plants (and that too in the extreme North Sea conditions) are being quoted for Pakistan’s best wind corridor of coastal Sindh .