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Business Recorder

Published Date: Nov 20, 2011

FINANCIAL CONSTRAINTS’: NO POSITIVE IMPACT ON PROLONGED LOADSHEDDING

The government has added 3000 mega watts of the electricity to the national grid in last 18 months but that also have no positive impact on prolonged load-shedding due to financial constraints in purchasing furnace oil to Independent Power Producers (IPPs).
This was stated by Dr Shahid Sattar, Member Energy Planning Commission of Pakistan while addressing a seminar titled “The crisis in Pakistan’s energy sector” here on Thursday.
He informed that no sizeable capacity had been added to the system in last 10 years and suggested that capacity addition needs to be affordable, sustainable and in line with a least cost generation expansion plan.
The government needs to control line losses of electricity and natural gas besides rationalising of energy tariff, establishing a single co-ordination agency for the development of energy sector along with appointment of competent professionals in public sector energy relating organisations like Wapda, Pepco and others.
He recommended the government to stop all new domestic gas connections, reverting CNG vehicles to petrol, investing in coal energy and converting all existing steam turbines to coal in a bid to supply sufficient gas to industrial sector, which provide job opportunities to thousands of people.
He said that at present the country is facing acute shortage of energy and to get rid of the situation there is a need to abolish all kind of untargeted subsidies, as the existing tariff structure and untargeted subsidies are more beneficial to high energy consumers also enjoy tariff subsidies, which were only meant for poor consumers.
Sattar cited the crisis of efficiency, fuel, finance, financial discipline and governance as the major causes of power crisis in Pakistan.
He said National Electricity Power Regulatory Authority (Nepra) is misunderstood of being a tariff determining and implementing body, saying that its only mandate is to regulate the power sector.
About dealing with the looming energy crisis, he said that the government should focus on improving efficiency in the power distribution system where line losses at national level are estimated at 22-23 percent whereas 12 percent technical losses.
He said that public sector generation units have lost more than 60 percent of installed capacity due to lack of maintenance.
He told that a reform agenda is being implemented in Pakistan under which new board of governors for companies have been formed.
Further a ‘Least Cost Generation Expansion Plan’ is in place under which new units with costly power generation are not permitted.
About circular debt, he said that currently it stands at Rs 301 billion which is increasing by Rs 1 billion with each day passing day, adding that estimated impact of circular debt on GDP is 3-4 percent in the shape of loss.
Further 10 percent of workforce is either laid off or under employed along with incalculable loss of fresh investment in the sector due to perpetuating load shedding, he maintained.
Dr Abid Suleri said energy crisis in Pakistan is triggered mostly by fiscal constraints and not by mere generation problems.
Fearing repercussions and instability caused by energy crisis, he said the forthcoming winter is expected to be harsh for the people as well as government due to extreme shortage of energy particularly gas.