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Published Date: Apr 30, 2013

SDPI Press Release (April 30, 2013)

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 period of
load shedding which currently stands at 12-14 hours in urban areas and16-18
hours in rural localities.

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 Pakistan.

He
said government is planning to increase generation of electricity by shifting
the bulk of generation responsibility from inefficient GENCOs to the more
efficient IPPs. He explained that Rs 13 billion per month are spent on
providing 6000 metric ton of 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 of 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 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, Mr. Shams-ul-Mulk said that lack of
appropriate planning has lead to today’s energy crisis in Pakistan. He pointed
lack of seriousness and political will at part of government political
leadership who despite clear warnings from WAPDA and international bodies,
didn’t bother to give serious thoughts 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 Pakistan. 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 mega watts 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.