In a time when the lawmakers are gripped in a myriad of political developments, the central bank has offered a helping hand to the ailing power sector. Thankfully, this is not a short-term fix like you-rent-me-electricity, but a rather stable approach as SBP has introduced financing facilities for renewable power projects.
According to the State Banks circular, financing facility would be available for renewable energy power plants producing up to 10MW, which hopefully will trigger a policy initiative by the government to set up a large number of small sized renewable energy plants.
There is no denying that Pakistan needs to manage the gas reserves more efficiently than being currently used as fuel for the power sector. Likewise, the practice of relying on furnace oil to generate electricity, which is the major reason for high power tariffs in Pakistan as it has no control over global oil price, has to be done away with over the course of years.
Heavy reliance on thermal electricity generation has also exposed Pakistan to IMF and WB who dictate terms in Pakistans economic matters. Hydel energy is also under exploited as the construction of dams has become a politically sensitive issue rather than an economic one.
With fast depleting gas reserves and the volatile nature of world oil prices, Pakistan never needed electricity generation from alternative sources before as badly as it does now. Unfortunately still, the contribution of renewable energy in the countrys power system is almost next to nothing having a mere 0.21 percent share - which mildly put is peanuts, compared to the 10 percent share worldwide.
And it is not that there is no potential of renewable energy in Pakistan as a study done by AEDB reveals that the coastal belt of Sindh and Balochistan has an exploitable potential of 50,000 MW from wind energy alone. Think about exploiting them completely and we will be earning sizeable revenue by exporting electricity. But lets get back to the reality as only 10 MW has been exploited so far, which is a massive disappointment given the huge potential.
The government plans to increase the share of alternative energy to 7 percent. It sounds good on paper, but their plan goes as far as 2030 which leaves one wondering with what intent were the Letters of Intent (LOIs) issued for 4650 MW wind power projects last year.
Solar energy is another avenue that needs to be exploited to the fullest as Pakistan is blessed enough to receive high levels of solar radiations throughout the year. Given that the financing facility aims to encourage power projects in far flung rural areas of Pakistan, solar energy best serves the purpose being relatively cheaper because it neither requires transmission lines nor other heavy infrastructure setup. Small hydro power plants and biomass energy are other resources brimming with potential - but potential alone serves no good unless exploited.
One hopes, this financing facility serves the purpose for Pakistan power sector which will undoubtedly have positive implications on the economy. But without active intervention by the government, such financing schemes can do little to turnaround the scenario.
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