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Optimal power generation policy

The abnormally high power tariff and recurring problem of load-shedding and circular debt necessitates the formulation of an optimal energy policy, ensuring 70 inexpensive electricity generations from hydro, wind and solar sources. It was believed that the PML-N government will fulfill its promise of ending the chronic issue of power outages and include a long term power generation policy in the 11th five year plan based on the optimal mix of hydro, wind, solar and thermal power. But the much needed long power generation policy was not formulated and adhoc strategy was pursued with a large component of health hazardous and costly imported coal based thermal power generation by converting the connectivity mega project into mainly an expensive thermal energy project.

Only one mega project of hydropower generation of 1421 megawatt, Tarbela extension will be completed before the closing of current fiscal year. The first power generation unit of 470 megawatt was formally inaugurated by the Prime Minister Shahid Khaqan Abbasi on Saturday. Other two units of the same power generation capacity shall be completed within the next few months. A small hydropower project of 108 megawatt has also been made operational in Chittral but the completion of 960 megawatt Neelum Jehlum project has been abnormally delayed although its construction work started in 2006. The implementation of 3600 mega watt Diya Mir hydropower project has been withdrawn from CPEC framework and is almost shelved. The future of another power generation project Dasu of 3000 plus megawatt is hanging in the balance and the government is paying demurrage charges to the Chinese construction companies that moved machinery to the site of the dam. Likewise, 730 megawatt Monda hydropower project is on the waiting list of financing and its construction cost has now jumped from Rs. 60 billion to Rs. 120 billion. The project was going to be launched in 2003. The approval of small hydropower stations with a total generation capacity of 2000 megawatt in Khyber Pukhtunkhwa is yet to be accorded by the federal government although these projects were submitted in 2012. The leaderships of political parties move hand in hand for the protection of their personal and political interest but deliberately stand divided on national interest. Lack of consensus for the construction of Kalabagh dam is a reflection of myopic vision of ethnicity and provincialism.

Because of the cobweb agreements loaded in favor of private thermal power producers there is a perpetual problem of massive circular debt accumulation. These agreements were made in the second tenure of PPP government as a measure of democracy is the best revenge to be slapped on the poor people Pakistan in the form of very expensive electricity tariff. It was because of the ant-national interest clauses in these agreements that Pakistan lost two cases to the private power producers in the international arbitration courts. The first case was lost to Turkish firm Karkey Kardeniz in Rental Power in the International Center for Settlement of Investment Disputes (ICSID) and a compensation of $ 800 million had to be paid. In another arbitration setback, the London Court of International Arbitration (LCIA) in its final award asked Pakistan to pay more than Rs. 14 billion ($ 140 million) to 10 Pakistani Independent Power Producers. Payment of about $ 900 million as compensation is a big jolt for a cash strapped and debt riddled country.

Economic Coordination Committee has approved circular debt settlement plan to clear the dues of Rs. 525 billion. It was decided to immediately pay Rs. 80 billion to private power producers and fuel suppliers aimed at easing their financial constraint. Ironically, the circular debt total liability as of December 2017 include Rs. 312 billion in energy cost and the remaining Rs. 214 billion is on account of capacity charges , liquidity damages and loans mark up. The capacity clause imply that the people have to pay for the electricity which is not produced and not sold to the government and which is not consumed by the consumers. Is not democracy the best revenge in the PPP political jargon? If the entire circular debt liability is not settled then there would be no escape from the load shedding in the upcoming summer season. A two hours electricity load shedding has already been started in cities and the duration of power supply in rural areas is hardly three hours. Hopefully a comprehensive power generation policy will be included in 12th five year plan.

 

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