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The energy imbroglio

April 14, 2013

If election promises are to be believed, PML-N has a serious workable action plan to resolve the energy crisis. — File Photo

ISLAMABAD: Chronic energy shortages have caused more than 10 per cent of growth loss to national economy over the past five years besides negatively affecting the lifestyles of the people. It was not unexpected, as such, that the mainstream political parties have come up with their vision and strategies for resolving the energy crisis.

The PML-N, the PPP and the PTI have all touched on the issue one way or the other. The latter two have put the energy sector at a somewhat lower level on priority list and have generalised suggestions on offer, but the PML-N has accorded it the second most important slot. If election promises are to be believed, the party has a serious workable action plan spread over a full chapter without resorting to unachievable populist measures.

“We envisage to tackle circular debt and system losses on a priority to end load-shedding in minimum time and in five years there will be a market for wholesale trade of electricity and most importantly consumers using the distribution network of local Discos will be able to buy electricity from their preferred producer,” says the PML-N manifesto. “And once there is enough competition in the market, neither government guarantees nor subsidies will be required and prices will start to go down as they have in the mobile telephone market.”

The PML-N blames the Musharraf government for introducing the curse of load-shedding, but holds the PPP responsible for gas load-shedding and forecasts that gas production will fall from 4000 MMCFD to only 1000 MMCFD by 2024-25, resulting in 80-85 per cent dependence on imported gas.

The PPP, according to the PML-N manifesto, failed to modernise existing inefficient thermal plants and instead opted for expensive rental power solutions, failed to attract investment in the energy sector, particularly in hydro and coal-based projects, and could not speed up gas exploration or import.

The PML-N says the multi-dimensional energy crisis required effective and coordinated measures in the short to medium term to fill not only the current power gap of 6000MW, but plan for increasing demand that growing population and economy will generate.

It plans merger of petroleum and power ministries as a ministry of energy and natural resources, reforming the power regulator and announcing upfront feed-in tariffs for wind, solar, small hydel and biomass projects.

More importantly, it wants to do away with tariff differential subsidy and perhaps a politically unpopular and difficult solution to resolve the energy sector’s circular debt.

In line with Punjab’s longstanding demand for separating power tariffs for different distribution companies, the party promises to end cross subsidy among distribution companies and their ultimate privatisation and mandatory wheeling charges for bringing in electricity from all sources, including private producers, to the national grid.

In the generation sector, the PML-N promises an investment of $300 million which it believed can increase existing efficiency by about 600MW and having a payback period of about one year. Similarly, it commits conversion of all furnace oil boilers into coal-fired boilers with an investment of $2 billion with a payback period of two years.

The party also commits to end power subsidy to all consumers and providing it to only lifeline consumers taking in less than 100 units per month.

The party’s stress is understandably on bringing into use a part (5000MW) of 100,000MW of potential from Thar coal and over 40,000MW potential from rivers. In total, it promises a capacity addition of 10,000MW in five years. It also has committed to imposing a blanket ban on setting up of new CNG stations and diverting existing CNG to public transport.

As with the power sector, the PML-N also seeks to rationalise gas tariff and aggressive wellhead pricing for oil and gas exploration to increase domestic production of oil and gas, along with high priority to imported gas.

On its part, the PPP manifesto has made promises that the party failed to deliver during its five-year term. Among a list of seven priorities, the party has put energy as part of broader infrastructure development at the fourth tier and seeks to develop wind, solar and biogas power solutions.

Taking credit for completing 3700MW of power plants initiated by the Musharraf government, the PPP commits to take Pakistan to a future where all its schoolchildren can study without having to put up with load-shedding, and where the industries will run round the clock on the basis of reliable and affordable electricity.

Despite having its major vote bank in Sindh, the PPP has not mentioned Thar coal development among its priorities in its election 2013 manifesto and casually talks about coal use in power generation. Besides planning to build run-of-the-river hydropower plants and to increase gas supply for power generation, the PPP has pledged to “work to reduce power tariffs by increasing the use of a mix of hydroelectricity and coal”.

Without mentioning the deterioration in the system that bleeds the power sector, the PPP has given a spin to inefficiencies and its failure to improve power companies by taking credit for spending Rs1.2 trillion in the last four years in subsidies to keep the price of electricity down. It also claims credit for the completion of Mangla Dam upgradation and moving forward on Bhasha Dam – both initiated by the military government.

The PPP intends to generate 12,000MW of additional power by mobilising new investment to the tune of $36 billion through independent power producers. The party also promises to improve tax and pricing regimes for gas exploration and to collect wind and solar energy data to prioritise green energy.

The PPP also promises to improve energy conservation and staff regulatory bodies with professionals through transparent process – on both counts its government could not deliver in five years and remained under criticism for appointing people of its choice rather than on merit.

A bit surprisingly, the most casual approach to energy crisis comes from the party that has been claiming to bring change in Pakistan. The PTI has placed the energy sector at the bottom of its election manifesto – on page 28 of its 31-page document, to be specific – and completes its solution in seven points.

These include expediting the restructuring of Wapda to improve efficiency in transmission, generation and distribution, but without any identifiable action plan. It commits to developing a commercially viable power tariff structure to protect weaker sections from increase in utility rates and yet generate enough resources for future investment, but is silent on how this would be possible.

The PTI also plans to increase village electrification and to encourage all public commercial vehicles to covert to CNG and encourage local private sector for extraction of oil and coal with joint ventures with foreign companies – a practice already in vogue. The party also wants nuclear power programme to expand and introduce time-bound policy objectives for utilising non-conventional energy sources.