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APP Pakistan

Published Date: Apr 30, 2013

Energy crises result of faulty business model: Dr. Mussadaq Malik

Caretaker
Minister for Water and Power Dr Mussadaq Malik has said that energy crisis in
Pakistan is the result of a faulty business model, increasing demand-supply
gap, and losses within transmission and distribution system. He was speaking at
a consultative meeting on “Pakistan’s Energy Crisis and its Possible Solutions”
organized by Sustainable Development Policy Institute (SDPI) here on Tuesday.
Talking on deepening energy crisis, the minister informed that if the required
funds and gas is not provided in next few days, there would be increase in load
shedding which currently stands at 12-14 hours in urban areas and 16-18 hours
in rural areas.Deliberating on the reasons for energy crisis, he said that
currently Pakistan is generating around 14,000 MW of electricity at peak with
40 percent of energy produced with the most expensive fuel such as Diesel and
Furnace oil.

He
said producing costly electricity and distributing it at subsidized prices is a
faulty business model which cannot work anywhere in the world. He also lamented
lack of accountability regime and management crisis which is contributing in power
crisis in the country.

He
said government is planning to increase generation of electricity by shifting
the bulk of generation responsibility from inefficient GENCOs to more efficient
IPPs. He explained that Rs 13 billion per month are spent on providing 6000
metric tons oil to GENCOs who generate only 650MW per month. He said idle
capacity of IPPs can be utilised by injecting Rs. 10 Billion rupees which would
produce 1150 MW electricity. This, he said, would result in saving 36 billion
rupees annually along with additional generation of 500 MW electricity per day.

Talking
on issues in supply of fuel to GENCO’s, he said ‘adulteration’ and ‘pilferage’
of fuel are major issues which results in billions of rupees loss to
government. He said the Ministry is working on a mechanism proposed by SDPI
titled ‘fair average quality price formula” under which the price of fuel would
be reduced if it is found to be of less quality. This, he said, would reduce
corruption and result into efficient power generation.

The
minister also said that only 2.5 percent of transmission losses are allowed by
regulators in Pakistan but this year these losses are estimated at 3.6 percent
and this differential when calculated, is more than the power needs of the two
smaller provinces in the country. He said the ministry is now trying to reduce
the transmission losses by signing performance contracts with transmission
companies and installing transmission measurement software’s.

Talking
of solutions to reduce distribution losses, he mentioned installing smart
meters at high-consumption users. In the long term, he suggested to either
privatize urban DISCOs or handing them over to the provinces. He also talked of
launching a website that would not only list the  efficiency and
performance of all GENCOs but allocations of money would be listed to ensure
transparency. 
Speaking at the occasion, Former Chairman WAPDA, Shams-ul-Mulk said that lack
of appropriate planning has led to today’s energy crisis in Pakistan. He
pointed lack of seriousness and political will on part of government political
leadership who despite clear warnings from WAPDA and international bodies,
didn’t bother to give serious thought to plan future energy needs of the
country. “WAPDA and International bodies warned government to build a major
water reservoir and power generation facility by 1992 but nothing was done and
1992 was the year when load shedding started in the country,” he added.  

In
his introductory remarks, Dr. Abid Suleri, Executive Director, SDPI said that
Pakistan needs to look for alternate and innovative ways to end energy crisis
in the country. He emphasized on better policy decisions from NEPRA and
demanded stringent measures to reduce pilferages in fuel supply and transmission
and distribution losses.

Dr
Suleri proposed to divert gas supply from inefficient plants to more efficient
plants so that wastage of gas is reduced and more megawatts of electricity can
be produced. He also advised ministry of water and power to interact more with
the academia and industry to come up with collective measures in addressing
energy crisis in Pakistan.