Partner: USAID- SARI Energy
Team Members: Engineer Arshad H. Abbasi
Pakistan is facing a huge electricity shortage and a sharp rise in electricity prices causing social unrest in some of its urban & rural areas. This has had a negative effect on industrial productivity and a commensurate decline in economic growth. There have been severe monetary repercussions owing to electricity shortage in the industrial and export sectors, which according to estimates by the Ministry of Water and Power (MOWP), have experienced losses at Rs 219 billion and Rs 75 billion respectively. Additionally, there has been a drastic decrease in 400,000 jobs in 2009. The state of Pakistan’s electricity sector can be attributed mainly to a high dependence on fossils fuels, high domestic & industrial demand and high transmission losses. Furthermore, in terms of governance, an absence of transparency and incompetence of the managers are problems endemic in the system that regulates provision of electricity in the country. The supply demand gap has been widened by 35% due to seasonal availability in hydropower and in 2009-10, the overall electricity consumption declined by 1.7%. The industrial sector has been particularly hard hit by the electricity shortage and there has been a substantial reduction in industrial productivity, which has had daunting impacts on the country’s exports and eventually leads to the deterioration of balance of payments
Electricity governance in Pakistan has to be consolidated by supporting a more transparent electricity power regulatory process. Therefore, the roles of the Ministry of Water and Power (MOWP) and Private Power and Infrastructure Board (PPIB) must also be scrutinized. It is intended stakeholders from different backgrounds can be brought together, so as to develop a common understanding about exploiting the potential of best practices and highlighting flaws in governance pertaining to the electricity sector.
In order to strengthen the electricity regulatory processes in Pakistan, SDPI in a joint initiative with US AID- SARI Energy, undertook the project of Electricity Governance in Pakistan. The study has emerged at a time when power outages together with high electricity costs, have arguably become a greater socio-economic menace than terrorism for Pakistan. The project focuses on the National Electric Power Regulation Authority, which is responsible for regulating power in Pakistan. The study aims to undertake a comprehensive in-depth analysis and discuss recommendations for interventions to improve Pakistan’s electricity sector. The power sector was liberalized in the mid 1990s, whereby a number of private entities gained access to the sector boosting competitiveness. Governance, however, has been exclusive of public interest due to the sector’s entrenched complexity. It is necessary for the public to understand the issues and to become involved in decision-making processes. The study will also help to create a strong collaboration between civil society, policymakers, regulators and other concerned parties on a common platform, whereby good governance and sound decision making processes are encouraged at the policy level. The long-term goal of the policy is the continuous provision of electricity to consumers, industry, farmers and customers at cheap rates.
The methodology adopted for the study leads to an analysis and a sound assessment of the situation, which is being reflected in the project report. The preparation of the report entails widespread consultation with the stakeholders, whereby its structure is being sufficiently delineated, identifying gaps and opportunities to improve governance. The nature of Pakistan’s electricity sector is unique so there shall be an adoption of research indicators pertaining to the World Resources Institute and the National Institute of Public Finance and Policy India. However, other country specific methodologies are being applied to undertake evaluation of the processes of electricity governance in Pakistan. It is believed that the research undertaken can help establish a new paradigm for measurable performance indicators for Pakistan’s electricity/energy sectors. Finally, a strategy is proposed to harness cheap hydroelectricity and other renewable energy generation options, which are imperative for a sustainable regional and global environment. Civil society, media and consumers are encouraged to understand and influence decision making in the electricity sector.