One misperception attached to the power sector is how increasing the generation capacity will bring respite to the ailing sector. What many forget is that it is not about capacity enhancements or new power generation plants but the actual generation that has remained stagnant for so many years.
Evidence in support of this can be found in total installed generation capacity of the country which currently stands at 22,797MW. Though the generation capacity of the power sector increased by only one percent in FY12 year-on-year, it grew almost 17 percent over FY08.
Yet at the same time, the country has experienced widening in the power shortfalls each year. This has been mostly due to the falling power generation over the last five years. Where the electricity generation in FY12 remained flat year-on-year, its one percent drop from FY08 levels is not trivial given the bulging demand.
To further aggravate the energy situation, electricity generation in the country has been restricted by the circular debt and the generation mix. Generation by the cash-strapped power stations is only 45 to 48 percent of the total installed capacity.
Also, the idea of new and efficient generation capacities makes little sense when most of installed capacity and generation continue to betray what one may call the common sense: with no coal-based power generation, 65 to 70 percent of total generation as well as nameplate capacity are thermal-based.
And as if it was not horrific enough, more than half of the little power generation that the country has is through furnace oil. Don’t forget, imported furnace oil is three times more expensive than gas-based power generation.
With the power shortfall expected to widen further in tandem with the summer season, the government due to take the office in a couple of weeks will be walking a tight rope. What really needs to be done is addressing the circular debt and revamping the existing idle capacity for maximising generation. And both will require tough and unpopular decisions.