Is there more misery in the offing?

Presently, the power sector is stuck with 43,000MWs of available generation capacity, while the power division informs us that our demand hovers between 10,000MWs in dead winters and a maximum of 26,000MWs in high summers.

Further, it is informed that 16,000MW being the cooling load, the consumers are being burdened with the raw capacity charges for the unutilized MWs averaging 8,000 to 10,000MWs – the reason for the presently prohibitively high tariffs.

Nobody tells us as to how we came up with this surplus and as to who is the culprit for this tragedy. We are also not in the know of things as to what mitigation measures are in the offing to come out of this straight jacket. However, we do know that all of the junkets tasked to counter such issues/riddles are staffed with non-professionals or at the best un-connected professionals.

Everyone lacks insights to power utility intricacies. Consequently, all solutions to the undue capacity charges remain away from fruitation.

Is it the maximum that would assail us or is there more misery in the offing? In other words, is the available generation capacity of 43,000MWs the maximum that has to be managed and when the demand reaches full utilization of the above figure, we would be free to enjoy a tariff without the extra burden of capacity charges for unutilized generation capacity?

A little foray into the stats – specially listed in the NTDC’s (National Transmission and Dispatch Company’s) latest IGCEF (Indicative Generation Capacity Expansion Plan) reveals that as much as 26,000MWs is destined to join the Country’s generation fleet by 2031 and thus adding to the existing MWs.

Additionally, another 6,000MWs of solar power plants are also planned to be added to the present generation fleet in one year or two under the so-called fuel substitution plan; see table as under:

In other words, on the face of static or negative demand growth, the new additions will further add to our miseries. One would assume that the related entities would be awake to this impending and monstrous burden. As we do not hear about any activity that would resemble effort to counter the up-coming burden, it is correct to assume that nothing is being planned.

What could be the requirements to counter the present and the upcoming negatives of the existing and the additional generation? Efforts to increase demand is one, the second is to improve upon the present grid coverage again supporting demand, the third is to deeply look into the possibility of postponement of new inductions and lastly to assure that all of these remain in action only on a sustainable basis.

The first of the solutions could only be taken up through re-vitalization of Pakistan’s fledging industry – basically, through support for it on all fronts – including at the policy level, provisioning of hassle-free and affordable power supplies and access to both local and foreign markets through the presently lacklustre TDAP (Trade Development Authority of Pakistan), improvement in the infrastructure of industrial estates, etc.

The linchpin, however, is an affordable power tariff. It all comes back to efforts to do away with the charging of raw capacity charges to the consumers. Industry has the ability to increase consumption in a big way. Meaning, that the power tariff has to change from the five decades-old load suppression model to something in line with the international best practices. The goal has to increase productive use of power.

However, the monster in waiting too has to be tackled on the immediate basis – through setting a specialist’s committee supported by all including the provincial PPDBs (or similar entities) the PPIB (Private Power and Infrastructure Board), CPPA-G (Central Power Purchasing Agency-Guaranteed) and the regulator NEPRA (National Electric Power Regulatory Authority).

NTDC and the DISCOs have to necessarily assist to confirm availability of the needed infrastructure. Each power unit listed in the IGCEF has to be tackled both in isolation and in a integrated manner so as to bring it into designated slots as appraised in light of the new updated demand studies.

Actually, no approval or LOI/LOA or PPAs have to be considered kosher until re-appraised. It is thus to be a wholesome activity with input from the FD (Finance Division), MOE, the Ministry of Industry and the Bureau of statistics etc., while nothing has to be ignored.

As actual power market surveys are to be buffeted by regression based statistical studies, hence the activity has to be a highly professional effort with any non-professional in the way put to pasture.

The effort has to be time bound, but conducted in a way that the recommendations would save both the power consumers and the investments in the offing. In addition to the re-fixation of COD of these plants, even already fixed tariffs / PPA conditionalities too have to be scrutinized and redone – specially, to assure that no over-invoicing (a most endemic issue) is evident and that the most efficient machinery/ contraptions are used, even if it requires a complete re-call of the earlier processes.

Actually, the fraudulent practices in the induction of IPPs (Independent Power Producers) (of all hues) have to be stopped once and for all.

The re-doing of the PPAs of up-coming IPPs has to be such that all of the negatives seen and listed by the Muhammad Ali Commission of 2021 have to be mitigated. Thus, in addition to correcting the possible burden of the upcoming MWs, the specialist’s committee would be correcting any errant PPAs in a comprehensive manner.

In addition to the above, the committee would be authorised even to outrightly cancel those projects that now do not fit into the new realities.

The fraud of some of the earlier approvals should not be any barrier in this exercise. It needs to be understood that there has been a paradigm change in technologies, economics of various fuels, that hydro power projects have their own negatives (environment etc.), that siting is sometimes more important than the MWs at a particular location and which can be sacrificed and that we have had enough of the blackmail of so-called REs in shape of hydros, etc.

The committee, however, has to comprise of the related professionals alone with no generalist on it. This may be difficult as the un-initiated has the penchant to become part of any important committee or cause. It is hoped that GoP would be mindful of these dangers and assure that the committee remains thoroughly professional to the core. It is also important that the committee does not face any pressure from any interested party and that, like always, change in the induction of up-coming plants is not considered as any threat to FDI in the country.

Copyright Business Recorder, 2024