There has been a lot of ruckus over the ongoing power crises and its possible solutions already. But since our finance advisor Shaukat Tarin has assured us that the circular debt issue will be settled by the end of this month, there is a need to peep into the nitty-gritty of this crisis again.
The current electricity shortfall is a matter of suspense as we are fed different numbers every other day. The deficit, according to Private Power Infrastructure Board (PPIB), is around 1,029 MW whereas government officials cite a figure of 3,000 MW. For arguments sake, lets go with the ministrys word.
Cash starved IPPs find it impossible to procure furnace oil from the state-owned PSO, whereas Wapda is restricted from buying adequate amount of furnace oil for electricity generation due to non-payment of bills by its consumers. Hence, circular debt becomes the root cause of energy crises as it forces IPPs to operate at lower efficiency levels.
Now, being optimistic, should the circular debt issue be resolved as per Tarins promise, it would ideally give IPPs ample fiscal space to procure the required furnace oil to run at optimal efficiency.
The countrys leading power producers - which operate at 43 percent level of plant efficiency - use 210 metric tons of furnace oil to generate 1 mega watt of electricity. But knowing that plants at KESC and other gencos are quite old and run at even lower efficiency levels, a figure of 218 MT/MW could be used for the sake of analysis.
Wapda, KESC and IPPs collectively have a furnace oil storage capacity in excess of 1.1 million metric tons, but only 23 percent of that is being utilised leaving them with 883 thousand metric tons of unutilised storage capacity.
Considering that the IPPs and Gencos cumulatively need an additional 654 thousand metric tons of furnace oil to make up for current electricity shortfall, this implies that the storage capacity would still be enough to accommodate the added furnace oil requirement.
Some would worry about the furnace oil movement constraints, but given PSOs logistical capacity those worries are largely unwarranted. A daily movement capability of 35,000 metric tons should be adequate enough to cater for the additional fuel requirement to bridge the energy shortfall of 3000 MW.
So where does that take us? No load shedding from next month onwards. Sounds great - it really does. But it is unlikely that many will take this potential Eid Package seriously when our minister himself thinks we have to live with load shedding till December.
Here lies a classic example of misleading statements. Our ministry has repeatedly said that Rental Power Plants (RPPs) are the only way out of the load-shedding menace. So, the argument goes, whats the need for RPPs when where we are all set to bridge the shortfall by this September. If the circular debt issue is settled then RPPs seem to be a waste of time, money and effort.
Either the government is not positive enough that circular debt issue will be resolved as early as promised or the RPPs are useless. Whats the correct story? Lets play a wait and watch game for 20 odd days and be optimistic about the circular debt issue being resolved. In that case, a very Happy Eid in advance.