It is a paradox that Pakistan's power sector has made progress but lacks sustainability. The prime objective should be the provision of uninterrupted energy to the masses at affordable costs. But this remains almost as elusive as ever. The kind of progress that should have been discouraged was the massive drive to mindlessly induct as many mega-watts into the system as possible as if the power sector consisted only of the generation component.In its recently released State of the Industry Report 2017, the National Electric and Power Regulatory Authority (Nepra) has once again highlighted that the addition of generation facilities has necessitated a strong transmission and distribution system to deliver those megawatts to consumers.
Needless to say, all efforts to bring efficiency in the sector would be defeated if the DISCOs do not improve their Transmission and Distribution (T&D) losses. The energy mix as a result of the interest in coal and RLNG power plants by the former PML-N government means that these two fossil fuels will dominate in the years to come. According to projections contained in the SOI by the National Transmission and Dispatch Company (NTDC), RLNG and coal together will account for 40 percent while hydro power would constitute 33 percent of the overall energy pie by FY2025. However, Nepra believes the hydropower projects might not come online in time which would reduce the projected overall capacity of 62,185 MW.
A matter of serious concern is that a good percentage of the coal power plants are imported and so is R-LNG. Nepra believes any 1 rupee depreciation against the dollar would pile up Rs4 billion on an annual basis to the imported fuel bill for planned generation in the near future. With the kind of severe current account deficit the country is facing in the foreseeable future, it will be a challenge for the government to both control the deficit and provide reliable generation, not to mention the burden of additional capacity payments. The regulator notes that the aim to lower overall consumer end tariff will suffer if in addition to lowering fuel costs, the capacity payments are not kept at an affordable level.
And what is the point of incurring these capacity payments if the energy sold does not increase? Nepra believes that constraints in the distribution and transmission system will need to be solved on a "war-footing" basis.It doesn't see energy sold increasing by more than 10 percent annually over the coming years and so emphasizes even more on keeping fuel costs on the lower side. But the new additions of LNG and coal won't be making that happen either. Then there is the case of renewables. The role of the Ministry of Water and Power has been questionable when it comes to the promotion of renewables.
Nepra notes that small hydropower plants could not be built as the Ministry did not provide a clear policy about their induction. In fact, the Ministry doesn't have a clear and consistent policy for any renewable source, be it wind, solar or hydropower.The SOI report also bemoans the shift in the existing regulatory regime through Amendment Act 2018 as well the government's enhanced role in policy and rule making for the regulator. The performance of the distribution and transmission sectors also continues to fall quite short of the mark. The problems of the power sector are many and complex calling for a long term strategy to solve them.