The private sector on Friday warned the government not to change the
fixed rate of return regime for the Independent Power Producers (IPPs)
until the country is able to bridge the demand and supply gap in the
power sector.

Any change prior to bridging the demand and supply
gap will adversely affect attracting fresh investment on power sector
especially under the new power generation policy announced recently,
Engro Pakistan Chief Executive Syed Muhammad Ali told Policy Symposium
on Taxation and Energy Reforms in Pakistan organised by Sustainable
Development Policy Institute (SDPI) at a local hotel.

He was of
the opinion that energy sector imports have been estimated at $14
billion in 2012 and these are projected to increase to $52 billion by
the end of 2020 with the present pace of gross domestic product growth
at 4.0 percent in the country with increase in demand from 13,000
megawatts (MW) to 26,000 MW by 2020.

Adviser to Balochistan Chief
Minister Dr Kaisar Bengali was critical on the government’s policy to
run newly established coal-fired power plants on imported coal and
warned that these would put additional burden on foreign exchange
reserves and would result in balance of payment difficulties in years to
come.

He was not satisfied with reply given by Prime Minister’s
Adviser on Energy Musadik Malik and said that the government has
announced to utilise the imported coal until the Thar coal reserves are
developed. He was of the opinion that if the government intends to do so
then there should be parallel effort on development of Thar coal
reserves so as to minimise the reliance on imported coal. He mentioned
that the government would spend huge resources on development of jetty
for import of coal at Gadani and also intends to construct power
transmission line and there is no similar plan on the cards for the
development of Thar coal reserves, he mentioned.

He was of the
view that utilising local resources for power generation would require
immediate steps for the development of Thar coal reserves, so as to
minimise the reliance on excessive import trend in the country that has
already put a negative impact on balance of payment position of the
country. He said that reforms in the energy sector should keep in place
the solutions of the difficulties keeping in view the ground realities.

Oil
and Gas Regulatory Authority (OGRA) Chairman Saeed Ahmed Khan was of
the view that in-efficiencies in oil and gas sector are the real
hindrance in the development of energy resources of the country and
informed that all gas-fired public sector power generation plants are
inefficient. He strongly proposed to privatise both public sector gas
distribution companies for improvement in the efficiency. Similarly, he
mentioned that a ban on development of gas distribution infrastructure
has been placed to minimise the demand and supply gap. It has been
directed to gas companies to rely on liquefied petroleum gas for supply
of gas in far-flung areas.

The prime minister’s adviser on energy
informed the participants of the symposium about the dynamics of the
energy crisis and said that it is not only trying to end load shedding
but meeting power demands of the country on medium and long-term basis
with present demand and supply gap at around 5,000 MW.

He was of
the view that the country is facing $5 billion deficit each year in the
energy sector and this state of affair is unsustainable for economy of
the country. He mentioned that Rs 13 billion worth gas is being provided
to public sector power companies and these are producing on 650 MW
power and against them IPPs are producing 1,100 MW power upon provision
of similar level of gas in the country. He informed that average bill
collection stands at 87 percent of the billed amount in other
distribution companies and bill collection in PESCO, QESCO and HESCO is
far below other companies leaving burden on government to bridge the
financial gap.