Holistic and ambitious, implementation is where the rub is
Soon after the assumption of power in 2008, the PPP government blamed, and rightly so, the Musharraf administration for failure to add to power generation capacity that had led to shortages and also for leaving behind considerable circular debt. Little was done by the Gilani administration however to improve power supply other than a symbolic foundation-laying of Diamir Bhasha dam without ensuring international financing. Meanwhile continuing subsidies combined with financial crunch led to the mounting of the circular debt. The IPPs consequently cut down production. Any big increase in power charges was considered an unpopular step and little thought was given to finding ways and means to pay off the ever-climbing circular debt. As was done by Shaukat Aziz, the PPP government also went for Rental Power Projects (RPPs). The Supreme Court later intervened, declared the RPPs illegal and ordered them to be shut down. As the first step towards resolving the energy issue, the PML-N government paid a large chunk of the circular debt – more than half of it, Rs320-odd billions. It has now come up with a holistic energy policy. The issue came up at Prime Minster Nawaz Sharif’s meeting with newspaper editors and senior journalists after it was discussed at the Council of Common Interests (CCI).
The energy issue is multidimensional. With a yawning gap between supply and demand which far outstrips the current generation capacity, it is unrealistic to expect an immediate end to shortages. As there is an increased dependence on expensive thermal fuel, the cost of production has skyrocketed to Rs12 per unit. The inefficient power transmission and distribution system currently records 25-28 per cent losses because of poor infrastructure, mismanagement and theft. The newly announced energy policy offers no quick fixes. It visualizes a complete end to load-shedding by 2017. As a remedy it offers a bitter pill. Except for those consuming up to 200 units, every consumer will have to pay higher bills. Power sector subsidy will be phased out by 2018. The cost of power generation will however be gradually reduced to a single digit per unit through use of cheaper fuels like coal, adding capacity in wind and solar production and improvements in transmission and distribution system which would reduce power theft and line losses.
The energy policy has ambitious aims. It is meant to build a power generation capacity that can meet the country’s energy needs, create a culture of energy conservation and responsibility, ensure generation of inexpensive and affordable electricity, minimise pilferage, promote world class efficiency in power generation, create a cutting edge transmission network, bring down financial losses across the system, align the ministries involved in the energy sector and improve governance. The policy document neatly spells out challenges, goals, policy principles and the overall strategy. It is rife with buzzwords like transparency, accountability, competition, sustainability and fairness. These being proverbial honeymoon days for the new government, one can only wish the policy makers god speed. In the ultimate analysis, all will depend on how the policy works out.