EDITORIAL: According to a Business Recorder exclusive report, frequent ongoing outages in major cities of the country are due to system constraints rather than a generation shortfall as was the case during previous administrations. Except for K-Electric there is not a single distribution company, including Islamabad Electric Supply Corporation, which has consistently shown high receivables, that has been able to draw the amount of power that was made available to it. A total of 23,940MW of power was allocated to meet estimated demand of 22,626MW, however, 19,321MW was drawn due to system constraints, particularly the limited capacity of the distribution and transmission network, and the continuing recovery-based load-shedding policy of the government.
It may be recalled that during the tenure of the Pakistan People's Party-led government (2008-13), the major constraint identified was generation shortfall which was to be dealt with through rental power projects (RPPs) that subsequently became controversial. The Supreme Court declared RPPs illegal through a detailed judgment end March 2012 and held finance ministry, Wapda, Pepco and Gencos responsible for "causing huge losses to the public exchequer, which run into billions of rupees by making 7 percent to 14 percent down payments to and purchasing electricity on higher rates, from RPPs."
The PML-N administration (2013-18) pledged to resolve the generation crisis and thenceforth launched a programme to enhance generation, mainly under the umbrella of the China Pakistan Economic Corridor (CPEC), but largely ignored the obsolete transmission and distribution network that had the capacity to evacuate no more than 16000MW as per the then recently retired Power Secretary. The PML-N government has come under considerable criticism for its illogical focus on generation while ignoring the need to strengthen the ability of the system to evacuate existing leave alone additional generation.
Be that as it may, the exception was the 2.1 billion dollar 660 kilovolt high voltage direct current Lahore-Matiari line project envisaging a 878-km transmission line (550.65-km in Punjab and 314.9-km in Sindh) with the objective of transmitting 4000MW from the new coal power plant at Port Qasim to northern Pakistan. The project was proposed as part of the cooperation agreements signed between China and Pakistan during President Xi's visit to Pakistan in 2015 with China Electric Power Equipment and Technology Company Limited (CET) tasked to build and operate for 25 years at a debt equity ratio of 80:20 with the loan tenor of 10 years (27 months grace) at an interest of 5.64 percent. The completion date of the project was given as 2021 and in September 2019 reports indicated that China was expediting work on the project though one would assume Covid-19 brought all activity to a standstill. No additional information on this critical project is available after September last year and nor was any additional proposed project to strengthen the network made public given that CET was under discussion to provide further transmission lines including between Port Qasim and Faisalabad.
In marked contrast to upcountry Discos/Gencos, K-Electric (KE), a private concern, evacuates all power it generates but is also the recipient of supply from the national grid and subsidies from the federal government under inter-disco tariff differential. The Economic Coordination Committee (ECC) allowed KE an average tariff increase of 2.89 rupees per unit on Friday whose effectivity is pending cabinet approval. It is interesting to note that former KE Chairman Ikram Sehgal has challenged the ECC's decision and queried how much, other than equity, was injected into the entity by the shareholders and in what manner as well as what was the entity's debt at the time of privatisation and what it is at present.
Copyright Business Recorder, 2020