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ISLAMABAD, July 22: After failing to overcome the electricity crisis, the government is working on a plan to give incentives to large housing societies, industrial and trade hubs and cities to help set up their own power plants. A senior government official told Dawn that some industrial cities like Sialkot and Faisalabad and large housing societies like the Bahria Town and Defence Housing Authority had shown interest in investing in power generation through traditional as well as non-traditional fuels.

The official said that besides changing the policy mindset at the level of generation and distribution companies, the National Electric Power Regulatory Authority (Nepra) would have to improve the process of issuing generation licences and approving tariff so that the usual and existing consumer tariffs were not adversely affected.

When a consumer and a producer agree to a special tariff without affecting normal categories of consumer tariff, Nepra would be expected to facilitate the deal.

Giving an example, he said that Bahria Town was charging its own tariff even from general households whose members did not have any objection because electricity was purchased from distribution companies in bulk and there was an uninterrupted supply of power.

The Sialkot and Faisalabad chambers of commerce had offers from certain companies to produce electricity from municipal and industrial wastes, but the existing policy and regulatory regime did not allow them to have reliable energy supply and at the same time address the environmental problems.

Similarly, some leading residential colonies had expressed their desire to set up their own generation and distribution systems in collaboration with their respective distribution company of Wapda under a government guarantee ensuring that whatever electricity they produced was provided to them and at the rates acceptable to most of their consumers.

The Wapda’s distribution companies could be compensated through a ‘tolling charge’ for use of their transmission system, the official said.

Keeping in mind the past opposition to captive power plants from distribution companies fearing loss of a large number of industrial and commercial consumers, described as “the cream of consumers”, the new model promises reasonable tolling charge to the distribution companies to distribute power from the dedicated plants and feeders.

Alternatively, the energy produced by the dedicated plants could be sold to distribution companies for distribution among designated consumers (industrial and commercial) at reasonably attractive tariff which would almost be the same as the industrial tariff currently charged by the Discos or even slightly higher.

Some of these consumers would even be happy to pay in advance for smooth electricity supply. This would ensure guaranteed payments every month from these consumers, allowing the Discos to concentrate on recoveries from problematic consumers and to improve their performance in some other area.

“It does not make any sense not to allow a community having the money and desire to set up power plants when we in the government have failed to provide them enough electricity to plan, make profits and live a decent life,” argued a senior government official.

“We should at least allow the entrepreneurial spirit to blossom and allow the consumers to solve some of their problems on their own.”

Allowing the private sector companies to solve at least partially the problem in the big cities and residential colonies now makes sense given the fact that most of these consumers are using expensive fuels in their individual generators in the absence of Wapda’s supply, impacting adversely on the foreign exchange situation.

The issue of natural gas becomes more acute because most large consumers have commercial or domestic connections which are exempt from gas disruption but in the process they use this gas for power generation despite a ban.