PESHAWAR: Under the guidance of Vice-Chancellor Dr Nadeem ul Haque, the Pakistan Institute of Development Economics (PIDE) has formed a ‘PIDE Power Commission,’ which is comprised on experts from power sector, having decades-long experience in the sector.
The members of the commission include Engr Tahir Basharat Cheema, former MD, PEPCO; Engr Salis Usman, General Manager Power Planning, NTDC; Engr Mujahid Islam Billah, ex CEO, FESCO; Basharat Ali, CFO, PEPCO; Engr Sajad Haider Syed, Dy Manager, NTDC; EngrMasood Akhtar, former GM, NPCC; Engr Azhar Iqbal, Director Finance, PEPCO; Engr Adnan Riaz Mir, GM, Monitoring, PP&MC; and Engr Abdul Qadeer Khan, ex GM, NPCC, according to a press release issued here on Sunday.
With contributions from the experts in the Commission, a major study is underway at PIDE.
This soon-to-be-launched study would provide deep insights into various segments of the power sector, providing workable, sustainable, and integrated solutions to the power sector woes.
According to PIDE, more than 60 percent of electricity is produced by thermal sources providing costly electricity in Pakistan. Further, the tariff mechanism adopted provides electricity charges across categories, time of use and sanctioned load, etc., creating inefficiencies and making electricity expensive for productive sectors (industry and businesses) of the economy.
Additionally, Pakistan is among the top thirty countries globally with relatively high tariff rates. Due to long-term agreements with guaranteed capacity payments to thermal generation companies, switching to cheaper indigenous energy sources is impossible in the short to medium term.
Therefore, the complex tariff mechanism needs to be revised to reduce electricity prices in Pakistan. The sector is about to implement a wholesale market model (CTBCM), demanding significant tariff reforms.
There should be fair pricing, where each consumer pays according to their consumption on a progressive trend, i.e., the more per unit energy is consumed, the more the consumer pays on average.
Pakistan’s power sector has been in crisis for years. Too many players in the system confuse each other to accumulate losses and give subsidies while at the same, the circular debt is rising continually, according to the press release.
Surprisingly, no government has taken the power sector with the urgency it deserves, and no serious research has gone into understanding the issues. Whatever decisions are made are at the advice of international financial institutions, who do not understand the local dynamics of the problem.
The release said energy is a chronic problem that eight governments have not been able to solve. Due to mismanagement and weak governance in the power sector, massive transmission & distribution losses occurred (Rs. 473 billion during 2021, out of which Rs. 402 recovered through tariff and Rs. 71 billion was added to circular debt).
Our decision-makers’ are lacking of informed long-term vision has led to distribution inefficiencies, expensive fuel mix, and rising capacity payments.
The results are unreliable electricity supplies, unaffordable electricity, and increasing business costs. The demand-supply gap has evolved over the years from deficits to excess installed capacity. Still, there is a shortage of cash flows to import fuel and supporting infrastructure to run it, leading to power outages.
Copyright Business Recorder, 2022
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