KARACHI: While suggesting a way forward towards achieving sustainable growth in the power sector, Syed Moonis Abdullah Alvi CEO K-Electric, said that privatization of DISCOs and deregulation of the sector is a must to overcome inefficiencies and curb the rising circular debt.
He also underscored the importance of automation to make procedures swift and termed digitization a pre-requisite for privatization of DISCOs as it provides verifiable and credible data for an investor to evaluate and do proper due diligence. He shared these opinions during a panel discussion on “Fixing Pakistan’s Power Sector – The Way Forward” in the Future Summit, a two-day long conference happening in Karachi.
The panel discussion brought together power sector experts and leaders to discuss the rising global trends, challenges and opportunities for Pakistan. The panellists of the session included Ahsan Zafar Syed – CEO, Engro Energy Limited; Syed Moonis Raza Alvi – CEO K-Electric; Prof. Dr. Fiaz Chaudhry, Director LUMS Energy Institute, Werner-Von Siemens chair; Ruhail Mohammad CEO, Lucky Electric Power Company; and Ayla Majid, Founder & CEO, Planetive. The session was moderated by Aftab Mahmood Butt, Chief Executive Officer, KAPCO.
The panel started with Aftab Mahmood Butt, the moderator of the session highlighting the issues in overall performance of the Distribution Companies. He said that 121,118 GWh units were produced in 2020-21 whereas only 99,372 of them were actually sold. He added that 21,745 GWh units were lost (17.95%) that created a receivables-payables gap of PKR 1.265 trillion. He also mentioned the whooping rate at which the circular debt has increased in recent years.
Moonis Alvi, during his conversation further advocated the overall impact of privatization by drawing a comparison between performance of K-Electric with the other DISCOs. As part of the conversation CEO K-Electric also mentioned major roadblocks which were preventing the progress of the power sector, with circular debt as one of the top in the list. Speaking about inefficiencies in power forecasting, he further suggested that a proper centralized institutions should be established to more accurately forecast the demand and supply of power nationwide. He also suggested that understanding of international energy market trends, and its impact on different parts of the country and its economy can further support the decision-making process during the planning phase. He appreciated the Government of Pakistan and the Regulatory authority for its efforts to revolutionize the sector through gradual deregulation and shared KE’s support to the Competitive Trading Bilateral Contract Market (CTBCM) model.
CEO Lucky Electric Power Company Ruhail Mohammad during his turn seconded the opinion of Moonis Alvi and shared it as one of the solutions for controlling the soaring circular debt. Moreover, he further emphasized that to resolve the issue of capacity payments or more clearly the circular debt, there are three solutions including effective management of the winter load, better utilization of captive power plants, and organically growing power demand by providing electricity to the 25% of the population that does not have the access to power directly.
Director LUMS Energy Institute, Prof. Dr. Fiaz Chaudhry, during his remarks raised a question that if the power sector being regulated correctly how circular debt continued to balloon? He further criticized the policy makers by saying that informed decisions were not being made and the processes were not being followed. He concluded that as a result the consumers across the country continue to suffer because of uninformed and poor planning. He mentioned that we lack the skills and capacity to develop an integrated system.
Engro Energy Limited’s Ahsan Zafar Syed mentioned that for liberalization to take place there are a few problems that we need to address first. He said that biggest issue is circular debt and 55% to 60% of it comes from the Government DISCOS. He added that the rest of the problem is excessive power which is coming from not having an independent planning institution. He said that Competitive Trading Bilateral Contract Market (CTBCM) is around the corner and it is a big step towards market liberalization.
Ayla Majid, Founder & CEO, Planetive also shared her thoughts and emphasized on investing in the production of renewable energy.
Copyright Business Recorder, 2022
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