ISLAMABAD: Prime Minister Shehbaz Sharif led federal government has held PTI government responsible for power load-shedding across the country, saying that the current power situation is almost entirely caused by acts of omissions and commission of the previous Government during 2018-22.
According to official sources, coupled with high and rising energy prices in the international market, Pakistan’s power sector is almost in the operation theatre and simply keeping it going is a miracle of a kind not known before in this sector.
Sharing further details, sources said, two projects namely Karot Hydro and Shanghai Thar were delayed: first on account of lack of ownership and project monitoring and the second because of failure to fulfill contractual commitments on already completed projects, thus delaying financial close.
Karot has started generation with extra efforts of incumbent government whereas Shanghai coal fired project is also expected to start generation in the months to come.
Govt decides to continue ‘minimum’ power load-shedding till Dec
The previous government also failed to open Revolving Account for completed projects like Sahiwal Coal and Hub Power meant no further financing for energy sector under CPEC umbrella.
Likewise, another high efficiency project namely Punjab Thermal RLNG Power Plant at Trimmu, Jhang (1263 MW) has been delayed for more than three years by the PTI government, first due to its ill-placed enthusiasm for witch hunt through NAB and then by its deliberate delay in achieving financial close.
“Had these three projects (3200 MW in total) been completed in time, load shedding in urban Pakistan would not have been witnessed despite high energy prices in the international market. Two of these do not need any imported fuel and the third is high efficiency LNG plant ((more than 60 percent) which is much more feasible that plants based on imported coal or residual fuel oil,” the sources added.
Talking about LNG availability for power sector, the sources said, there has been lack of planning to execute long-term contract for purchasing RLNG. During COVID-19 (Mid 2020) the RLNG prices went far lower in the international market, but that opportunity of buying RLNG at US$ 3 to 5 per MMBTU was not availed by the then government and no long-term contact was entered at that stage. If such contract had been signed, consumers would have faced much lower electricity bills.
The average purchase price of the RLNG under the long-term contacts which was signed by the PML-N government has been at price of US$ 8.02/mmbtu between 2018 and 2022 whereas during same period on-spot average price has been US$ 9.44/mmbtu, despite huge price dip for two years in the same period on account of Covid. Much greater loss has been incurred during recent months wherein spot buying of RLNG has been as high as US$ 38/mmbtu.
The circular debt stock in June 2018 was Rs.1.152 trillion, which increased to Rs.2.467 trillion in March 2022, an increase of 114 percent, despite major injection out of taxpayer’s money. One of the major causes of this rapid rise in circular debt is the depreciation of Pak Rupee value from Rs 115 per dollar to Rs 191 per US dollar under the watch of PTI Government and under the watch of the caretaker arrangement that was put in place to bring PTI government into power.
To save forex: Govt decides to allow minimum load-shedding till Dec
The rise in circular debt has affected Government’s ability to pay privately-owned power plants in a timely fashion which, in turn, has piled up liabilities of coal power plants and dried their credit lines. So much so that three major power plants on coal (total capacity of 3900 MWs) have such low stock of coal that they are running on part load.
In case of one coal power plant, coal is stuck at Karachi port because it has no money to clear the imported stock.
For procurement of LNG, PLL was granted exemptions from PPRA Rules on 28th May 2022 for July 2022 onward delivery cargoes. Accordingly, PLL started procurement of July 2022 cargoes after28th May 2022, with three tenders closing in June 2022. However, due to downgrade in credit rating of the country and LC confirmation issues, participation by suppliers remained less.
The sources said that existing RFO stocks available with the oil Industry (OMCs and Refineries) as of 30/6/2022 are 277,000 MT, whereas 2 RFO cargoes of 130,000 MT are off port at present. Import of around 180,000 MT is planned for July 2022. Thus, the above arrangements are sufficient to meet the demand of 436,000 MT placed by Power Division during July 2022.
“Previous Government either did not understand the CPEC’s energy framework or was simply out there to strangle it to slow but sure death,” the sources concluded.
Copyright Business Recorder, 2022