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Not a penny in budgets for making power for 19 years

25 April, 2013

LAHORE: Not a single penny has been allocated in federal budgets for power generation for the last 19 years despite unprecedented electricity loadshedding in the country.

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LAHORE: Not a single penny has been allocated in federal budgets for power generation for the last 19 years despite unprecedented electricity loadshedding in the country.

This was stated by former managing director of Pepco, Engineer Tahir Basharat Cheema, while addressing a seminar on “Pakistan power sector: past, present and the future” held here at Pakistan Engineering Congress on Wednesday.

Stressing the need for higher budgetary allocation to meet rising power costs, he observed that no government has allocated any fund in national budget for electricity generation after 1994.

“The National Highway Authority was given Rs92 billion in current budget while Rs16 billion was allocated only for a single constituency and if this amount was given to power sector that would have gone a long way in eliminate power loadshedding.” Cheema, who is presently heading an Energy Management Committee of the Ministry of Water and Power, stated that government's seriousness to control power crisis can be gauged by the fact that it allocated a minor amount of Rs15 billion for power sector but that was not released either and diverted to some other project.

“In order to tackle the energy shortages, maximum funds should be allocated for construction of dams or water reservoirs, besides tapping of Thar Coal, completion of Iran-Pakistan gas pipeline, energy conservation & energy efficiency, fuel mix and energy rationing.”At least Rs50 billion of the total budget should be allocated for hydel power projects, he stressed.

Reliance on costly thermal power has been jacking up the cost of production and the import bill as well. “The country is in dire need of an urgent shift in its energy-mix in favour of hydel power and local fuels. Use of biogas should be promoted throughout the rural sector both for electricity generation and gas for cooking besides producing bio fertiliser, said the power sector expert.He expressed that 175 billion tons of Thar coal reserves with a price tag of $13 trillion in the international market are enough to provide 100,000MW of electricity for 100 years. Uninterrupted and affordable power supplies can turn Pakistan into an economic powerhouse. While expressing the optimism for construction of Kalabagh Dam, he said that Sindh needs fresh water the most and it is the KBD, which would fulfill its dire need of fresh water.

Quoting noted economist Dr Akmal Hussain, former MD Pepco said that governments in Pakistan have failed to address long-run problems until they become short-run crises. Successive governments have been focusing on the much more expensive oil-based thermal power plants rather than cheaper hydroelectric plants. Adverse change in composition of electricity supply resulted in sharply increasing the average cost of electricity production, which accelerated as oil prices rose sharply.

Until recently, government kept notified price of electricity that power distribution companies could charge to consumers, below the cost at which they were buying it from power producers, creating huge subsidies owed to the distribution companies that a cash strapped government could not entirely pay. It is clear that the power crises is due primarily to a failure of public policy: delay in setting up hydropower projects, wrong choice of technology in oil-based rather than coal-based thermal power plants, delay in rationalizing tariffs and poor fiscal management. He said that IPPs under the 1994 Policy, though filling-in capacity needs, further deteriorate both generation and fuel mix-ramification for the whole sector – a shift that has simply changed the economics once and for all.

Lamenting the lack of legislation to support utility operations, he said that reduced governmental writ in rural areas and some important urban centers, kunda and bills non-payment culture have worsened the issue further. Improved writ of the government to control theft of electricity, non-payment of bills and subsequent creation of circular debt will lessen power shortage. Beside, quick promulgation and enactment of enabling legislation as well as conversion of thermal plants to coal as a national policy are some of the remedies that could help shorten Pakistan's energy crisis.


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