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The Frontier Post

Published Date: May 1, 2013

?Energy crises result of faulty business model?

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.