Govt helpless on energy crisis

January 19, 2014 - 7:07:52 am
ISLAMABAD: “My government is devoting its time and resources to tackling the energy problem,” Prime Minister Nawaz Sharif said in his first address to the nation in August. By the time he said this, his government had cleared unpaid bills of Rs480bn ($4.57bn) of all public and private power producers and their fuel suppliers, which, he said, had secured 1,700MW of electricity for the national grid.

The National Energy Policy (NEP) was also ready towards end-July. Almost six months down the road, his government is finding it tough to meet even the reduced power demand in winters, while the gas shortages have left people complaining of the difficulties of cooking food and heating water. At the same time, private power producers are grumbling about fresh unpaid bills.

The ambitious NEP seems to be going nowhere, at least not for the moment. Fatigue and desperation are slowly overtaking the ministers and Punjab Chief Minister Shahbaz Sharif, tasked to reform the collapsing power sector and woo private investors.

Potential investors are waiting for the government to first implement the promised power sector reforms before they invest in new generation projects.

The MoUs signed by the Punjab and federal governments with Chinese companies “interested” in investing in power generation here are so far worthless pieces of paper. 

“The so-called energy policy is no more than a ‘concept’ paper and its targets are unlikely to be achieved in five years,” argues a former Pepco boss.

“It is a flawed document authored by those with no experience of or stake in the power sector. No milestones have been set and no execution strategy formulated.”

His comment isn’t off the mark. Apart from having substantially raised the electricity prices for all consumers to reduce power subsidies from 1.8pc to 0.3-0.4pc of GDP, the government is yet to execute other aspects of the ambitious policy that promises an investment of over $25bn in the power sector to end blackouts by 2017 and produce surplus electricity by 2018.

The delay in reforms has increased transmission and distribution losses from 28pc to 29-30pc and added another Rs89bn to the unrecovered bills from July to November 2013. The campaign against gas and power thieves has fizzled out. The planned import of electricity from Central Asia, Iran and India has been put on the back burner and the energy conservation strategy postponed until summer.