Tack­ling en­ergy cri­sis

The Pak Banker - - FRONT PAGE -

Among the most se­ri­ous prob­lems fac­ing the coun­try one is short­age of en­ergy and its high prices. Ac­cord­ing to ex­perts, the key strat­egy should be to bring ef­fi­cien­cies in the en­ergy chain to slash im­port bill, lower the cir­cu­lar-debt buildup and cut PSEs' leak­ages to curb fis­cal deficit, and to lower the over­all cost of en­ergy to bring com­pet­i­tive­ness in the econ­omy. Equally es­sen­tial is to re­verse the trade bal­ance by cut­ting im­ports. An agrar­ian econ­omy is a net im­porter; the equa­tion is re­quired to be changed.Pak­istan's to­tal en­ergy and food/agri­cul­ture im­ports are es­ti­mated at $24 bil­lion in FY18, which is 40 per­cent of to­tal im­ports and 130 per­cent of cur­rent ac­count deficit. Im­ported en­ergy ac­counts for 45 per­cent of coun­try's prime en­ergy sup­ply and 40 per­cent of pri­mary en­ergy is con­sumed in power gen­er­a­tion.

It is no se­cret that the coun­try has enough in­dige­nous en­ergy po­ten­tial which needs to be uti­lized fully. The solo fo­cus on new gen­er­a­tion ought to be on Thar coal, re­new­able en­ergy (hy­dro, wind, so­lar and biomass) and on ex­plo­ration of oil and gas in­clud­ing shale and tight gas.The en­ergy ca­pac­ity expansion is alarm­ing and it is on take or pay ba­sis. The gov­ern­ment has to pay for ev­ery megawatt of ca­pac­ity ad­di­tion ir­re­spec­tive of de­mand. Ac­cord­ing to NEPRA's lat­est re­port, the net ca­pac­ity ad­di­tion stood at 7,775MW in 2018 and to­tal ca­pac­ity ad­di­tion planned till 2024-25 is 35,999MW.The growth is go­ing to slow down in FY19 and FY20 in the quest to cut down twin deficit. Ac­cord­ing to NEPRA, the de­mand is as­sumed to grow by 4.5 per­cent and the en­ergy will re­main sur­plus ev­ery year, peak­ing at 19,934MW in 2024-25. Th­ese num­bers are alarm­ing as the ca­pac­ity pay­ment has to be made and that will in­vari­ably in­crease the en­ergy prices.

It can­not be em­pha­sized too much that the PTI en­ergy team has to be very care­ful with any power-gen­er­a­tion ad­di­tion and there should be only take and pay pol­icy. The fo­cus should be on en­ergy con­ser­va­tion. There is un­doc­u­mented cap­tive-power gen­er­a­tion across the coun­try run­ning on gas. The cap­tive gen­er­a­tion is in­ef­fi­cient but do­mes­tic gas prices in Khy­ber Pakhtunkhwa and Sindh are too low for in­dus­tries to not opt for grid elec­tric­ity.The gas prices ought to be re­vised up­wards to in­cen­tivize cap­tive con­sumers to move to the grid. And within the national grid, only most ef­fi­cient new plants should be run­ning on im­ported fuel while the in­ef­fi­cient plants should be closed down or re­tired. The use of so­lar en­ergy should be pro­moted to re­place cap­tive gen­er­a­tion on fos­sil fuel across the coun­try, while in agri­cul­ture land biomass is re­quired to scale up.

Bring­ing en­ergy ef­fi­ciency in both gen­er­a­tion and con­sump­tion can help in re­duc­ing the oil im­port bill to a great ex­tent. On T&D losses, the need is have com­pe­tent tech­ni­cal teams to check the prob­lems across the grid and in­vest in ca­ble, trans­form­ers and other in­fra­struc­ture where it is re­quired, and im­prove gov­er­nance where theft is high. In or­der to straighten the en­ergy sec­tor, the need is to merge the two reg­u­la­tors (Ogra and Nepra) into one. When the coun­try has one en­ergy min­istry, there is no ra­tio­nale for two reg­u­la­tors. The Dis­cos are re­quired to be pri­va­tized or at least de-reg­u­lar­ized to take the brunt of their losses. Since en­ergy is the key to fu­ture eco­nomic devel­op­ment, no ef­forts should be spared to put the sec­tor on an even keel.

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