Power sector: Hits and misses 2017

The outgoing year saw a plethora of activity in the power sector with the government intent on delivering on its promise of a load-shedding free Pakistan. Even though the promise still remains elusive, a review of the important shake-ups in the sector is warranted to gauge if there has been progress towards creating a financially sound and operationally sustainable power sector.

Highlights of 2017 include: Circular debt tops Rs800 billion, love for RLNG power plants, move to competitive bidding for tariff determination, clipping the regulator's wings, creation of an energy ministry, amending long term power purchase agreements, and the tussle with renewables.

There has been no doubt that generation has been the key focus of the PML-N government. Their masterstroke has been the addition of three R-LNG power plants of approximately 3600MW which are being run on imported R-LNG. A fourth one is on the way. Then there are the coal power projects under CPEC such as the 1320 Sahiwal and Port Qasim coal plants.

The changing energy mix which involves reducing dependence on inefficient and expensive furnace oil generation is a good step. But as this column has highlighted time and again; you do not fill a leaking bottle and hope to quench your thirst. Both the distribution and transmission sectors are still riddled with problems which have persisted since time immemorial.

In 2017, Nepra once again cautioned in its reports the lack of attention towards removing grid constraints and laying down new transmission lines to induct the upcoming new generation capacity. At the same time the regulator has also lambasted the distribution companies (DISCOs) for data manipulation and fake reporting.

Lack of reliable data for the power sector has been especially problematic as it creates difficulty in undertaking meaningful analysis by analysts who have to rely on guesstimates and outdated figures. When the Ministry of Water and Power (MoWP) leads from example and chooses to withhold common figures such as daily power generation data, even from the regulator, transparency certainly goes down the drain.

In reality, the state of DISCOs is far from the utopian picture the Ministry paints it to be. For starters, the transmission and distribution losses (T&D) for the majority of DISCOs with the exception of TESCO and IESCO failed to meet targets.

As the Nepra State of Industry (SOI) Report 2016 notes other DISCOs had more than 20 percent overloaded feeders. PESCO and MEPCO had more than 40% feeders overloaded, whereas in LESCO were loaded above 80 percent. On a country-wide

NEPRA noted that except for IESCO, where overloading of 11 kV feeders was around 12 percent, other DISCOs had more than 20 percent overloaded feeders. PESCO and MEPCO had more than 40% feeders overloaded, whereas in LESCO were loaded above 80 percent. On a country-wide basis about 32 percent of 11 kV feeders were found to be loaded above the acceptable level.

The condition of the transmission sector is equally if not more alarming. Statistics in SOI showed that out of a total of 33 auto transformers at 500/220 kV grid stations eight were found to be loaded above their rated capacity. Similarly, an alarming 72 percent of auto transformers at 220/132 kV were found to be loaded 80 percent above their rated capacity. Even though there has been improvement in this regard, there is a long way to go to meet the increased generation in the future.

By its own estimates the National Transmission and Despatch Company (NTDC ) forecasts planned generation capability of almost 34000 MW by 2021 while the current transmission network can only support 18000 MW at best according to various energy experts

Renewable investors especially wind power project owners were sacrificed at the "altar of the grid" by NTDC with long delays in grid connections being faced by the projects. When it comes to renewables there has been resistance in certain quarters of the government to limit their role in the overall power mix.
However, the offer by the Danish government to help Pakistan in dealing with grid constraints to make renewables a part of the base-load should be taken advantage of to increase their share in power generation.

For paucity of space this column will cover the remaining highlights tomorrow which include the positive move towards competitive bidding, harming the regulator's role in the power sector, the change in power purchase agreements as well as the delayed creation of an energy ministry.