Dissecting the new energy policy

The PML-N government by taking over the reins of the country has been elected to participate in two grueling marathons, and coming second isn’t an option in either case. One is the fight against terrorism and the other is digging Pakistan out of the energy quagmire. The recently elected government has released its stratagem with regards to the latter in the National Power Policy (NPP) unveiled on Tuesday. And if one persists with the analogy, it’s clear that PML-N has gone for a consistent jog of endurance in lieu of quick sprints to cover the daunting distance and win the energy marathon.
The NPP showcases a prudently woven together – albeit bordering on quixotic – framework to bridge the prodigious demand-supply gap of power, which as things stand is around 5000 MW. It highlights an aim of a sustainable growth in power generation and vies to infuse an energy conservation culture that has historically been alien to Pakistan. Furthermore, while those consuming more than 200 units would see an increase in their bills, the long term goal is to reduce the cost of power generation, which currently hovers around Rs 12 per unit.
The crux of the new energy policy, and the solution it divulges, is three-pronged: a) bridging the energy disparity; b) making power affordable and c) increasing the efficiency of power distribution.
To bridge the energy disparity the first step being proposed is the increase in infrastructural work – including restructuring the national grid – which would be accompanied by incentives for private sector investment. Another step for power augmentation is induction of merit in the allocation of fuel, and preference for plant efficiency. Of course the addition of new projects including coal, hydel, thermal and wind will also bolster the energy reservoir. Phasing out subsidy for the power sector in five years’ time would also boost the numbers. And lastly, creating a competitive bidding environment increasing and transparency for the smooth privatisation of government assets would also help power generation in the long run.
Ensuring power affordability of course is dependent on reducing the power generation cost. Targeting cost reduction, the government plans on widening the energy gamut by including cheaper energy sources like biomass, coal, hydel and wind. Hydel projects in particular are the focus of attention as the government plans on increasing investment in all kinds of river hydel projects – something of them being shifted towards privatisation as well. Furthermore, there are plans to increase LNG terminals, which would also provide cover for the recent failure in the fulfillment of pipeline projects like the Iran-Pakistan and Turkmenistan-Afghanistan-Pakistan-India pipelines. With 45 percent of the current power generation being conjured through the expensive furnace oil, throwing renewable and lost cost energy options into the mix would make power more affordable post 2018.
Increasing power distribution efficiency requires reduction in power thefts and curtailing losses in transmission lines. High up on the list to sort out this problem is the smooth transition from GENCOs to IPPs. This transition is supposed to save up to Rs 3 billion every month, and also generate a further 500 MW of electricity. GENCOs have quite often been accused to deteriorating quality and oil theft. To curb losses from transmission lines upgradation in SCADA software has been proposed, with plants being built close to the centres along with expansion of high voltage lines of transmission as well.
On paper – and it can only be traced therein for the time being – the NPP looks like a humdinger. It identifies the issues and proposes apposite solutions; but ironically this is precisely why it borders on idealism. Most of the solutions proposed require the splurging of some serious dough, like for instance the infrastructural development, renovation of the power grids and even fuel purchase. Even though Ishaq Dar is adamant that the latest demand for IMF loan would be a smooth transaction, one still can’t deny the fact that for Pakistan to drag itself out of the energy predicament everything would have to go as scripted in the NPP. While that might be an idealistic hammer waiting to strike down sanguinity, one would still have to admit that even if the script isn’t followed in its entirety and even if it doesn’t result in the rather wishful complete eradication of the power crisis in the next half a decade, it could still at least put the country on the right track, where self-sufficiency in power generation borders of realism and not delusion.
The energy race may be a long one, but the NPP still promises enough to ensure that the country remains in the hunt for glory. However, the finish line is farther than what’s been suggested in the NPP.

The writer is Energy and Finance Correspondent, Pakistan Today. Email: ; Twitter: @khuldune