Published Date: Oct 20, 2011
The crisis in Pakistan’s energy sector (SDPI Press Release)
There is a need to control lines losses, rationalize energy tariffs, establish a single coordinating agency for energy development in Pakistan, appointing competent professional CEO’s and private management for public sector energy enterprises, and abolish all kind of untargeted subsidies, said Shahid Sattar, Member Energy, Planning Commission of Pakistan while addressing the special seminar on “The crisis in Pakistan’s energy sector” organized by Sustainable Development Policy Institute (SDPI) here on Thursday.
Dr Abid Q. Suleri, Executive Director, SDPI and Dr Vaqar Ahmed, Head, Economic Growth Unit, SDPI, also spoke at the event.
Mr Sattar cited the crisis of efficiency, fuel, finance, financial discipline and governance as the major causes of today’s power crisis in Pakistan. He highlighted there is no central coordinating agency dealing with energy sector as a whole in Pakistan. He said Nepra is misunderstood of being a tariff determining and implementing body but its only mandate is to regulate the power sector with thrust on setting directions for sustainable development of energy sector in Pakistan. He was of the view that no sizeable capacity had been added into system in last 10 years, except extremely costly 3000 MW in the last 18 months which has no positive impact on load shedding because of financial constraints. He suggested that capacity addition needs to be affordable, sustainable and in line with a least cost generation expansion plan.
He stressed to focus on improving efficiency in the electricity distribution system where line losses at national level are estimated at 22-23 percent line theft whereas 12 percent technical losses. He suggested measures to address line losses such as fighting power theft effectively, reducing line losses, improving efficiencies through latest technologies and better governance.
He said that Public Sector generation units have lost more than 60 percent of installed capacity due to lack of maintenance. He said that all the public sector energy enterprises must be run by professional technical staff, outside of government purview. 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 emplaced under which new units with costly power generation are not permitted. Mr. Sattar also lamented over the existing tariff structure and untargeted subsidies in Pakistan. He explained that highest energy users also enjoy tariff subsidies which were only meant for poor consumers.
Talking of circular debt, he said that currently circular debt stands at 301 billion rupees with 1 billion rupees increase per day. He said that estimated impact of circular debt on GDP is 3-4 percent loss of GDP. 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 recommended stopping all new domestic gas connections, reverting of CNG vehicles to petrol, investing in coal energy and converting all existing steam turbines to coal.
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. “I hope I am wrong but I can see a lot of unrest and turmoil in the coming winter due to this worsening energy situation and increasing demand while a number of internal and external factors are at play” Dr Suleri added.
He lamented indiscriminate use of energy resources in Pakistan and called for preserving the already scarce natural resources. He also urged the need to move towards alternate sources of energy and end politicization over hydel projects, and review and evaluate successes of solar and wind energy projects.
Dr Vaqar, in his concluding remarks, appreciated Planning Commission’s consultative process with stakeholders and added that energy sector should not be run by civil servants but professionals.