Daily Times

Like geopolitical security, cross-border, water & food security, energy security, being linchpin of all economic-cum-social activities, commands prime importance. Pakistan is not richly endowed with oil & gas which have to be imported by sea & hence vulnerable to blockades. Its coal reserves are not easily exploitable. Hydel power is marred by low river flows due to climate change & water terrorism by India. What remains is renewable energy for which there is the presence of strong winds in costal & northern area, solar energy beating down on its parched deserts & abundance of agricultural refuse. Apropos to this, RE provides the only long-term viable solution.

At an astronomical quantum of over Rs. 02 trillion & with an average annual increment of Rs. 200 – 250 billion circular debt is all set to ravage Pakistan’s energy sector. It is being aggravated by the day by “Take or Pay” vs. “Take & Pay” IPP policy. World over, competitive bidding forms basis of tariff setting. Unfortunately, given massive or engineered public backlash along with debatable presence of skullduggery in policy makers, cost plus method & upfront tariff method were adopted. On their part, IPPs artificially jacked up their capital-cum-operational costs, gave inflated escalations & unrealistic indexations. Results were unprecedented sovereign guarantees on capacity installations, astronomical ROI of 17%, and amazingly short investment payback periods of 2 – 4 years. Consequently, profits generated were 18.26 times & dividends 22 time the investment! On exposure of instant ghastly scenario, Government had to switch for competitive bidding.

However, previous governments had entered into very long-term contracts with IPPs & same could not be shortened unilaterally, lest the State is being dragged into international Courts where it was sure to lose with added pain of harsh penalties. Predictably, IPPs started to highlight inconsistency in governmental policies; Rental Power Projects in PPP era to IPPs in PML-N era to a counterblast in PTI tenure. Such noises do not augur well for Pakistan in the global comity wherein it is at risk of becoming an economic pariah if arm-twisting of IPPs goes too far. Already, Pakistan trails low ranking in Ease of Doing Business (EODB) indicators with most pressing lapses in: (I) contract enforcement, (ii) insolvency resolution, (iii) property rights; intellectual, moveable, immovable, (iv) taxation, (v) cross-border trade.

If the human race is to survive, we’re eventually going to have to switch over to completely renewable energy

It is very heartening that Power Division Federal Ministry of Energy has for the first time placed the ARE Policy 2019 acknowledging demand of provinces that all policy matters and amendments there to relating to Power sector have to be decided by the Council of Common Interest, which is only legal and Constitutional forum competent in this regard.

In the past the Power Division has repeatedly taken ad-hoc decisions through Cabinet Committee on Energy (CCoE) and has caused set back to the Alternate and Renewable Energy sector in Pakistan. It is hoped that in future Power Division will continue to approach CCI whenever a decision in matters of Power sector are required.

The most important point is that this draft lays down a target to achieve 20% of ON-Grid RE generation selling energy to Central Power Purchase Agency (CPPA-G), whereas by the year 2030 its expects to have developed 30% of the total grid generation on renewable energy. It is felt that it a very ambitious target, In fact in view of past performance of public sector entities shows that it is not achievable. Since 2006, AEDB, NTDC and CPPA-G could add only about 2500 MW through ARE resources in the grid. If these percentages are translated into numbers it means that by 2025 almost 6000MW have to be added to the grid through renewable energy and by the year 2030 12000 MW have to be added. It is felt that just through IPPs, it may not be possible to achieve these targets, therefore besides procurement through IPPs, wheeling as well as net-metering should be encouraged and made part of these targets and where NTDC or DISCOs hinder any addition, they must be held accountable.

There should be reduction in delay by NTDC Ingrid interconnection and evacuation from the projects. In this regard, if the national grid company, which is NTDC, is not able to commit to requisite timelines for evacuation, the Provincial Grid Companies (PGCs) or the project sponsors shall have the option of undertaking the grid inter-connection works subject to conformity to the grid codes and necessary NTDC approvals. NTDC and /or DISCOs shall accord approvals of the grid inter-connection within 30 days of submission by the PGC or the project sponsors. NEPRA shall determine the tariff or such interconnection or grid evacuation, by the Provincial Grid Company or by the project sponsor, under a cost-plus regime with same Return on Equity (RoE) as would have been given to NTDC and the same other incentives as are available for the power project setup.

ARE target percentages in the Policy as above shall be translated into quantified MW to be added each year. Integrated Generation Capacity Expansion Plan has to be an inclusive document where the provinces are involved and finalized through CCI, because the future generation and the projects that have to be developed by AEDB in the renewable energy will be based on this IGCEP.

There should be an increase in ARE plants and reduction of the aggregate price of energy generated from the site. In this regard, AEDB shall allow all existing ARE power plants to hybridize the use of land by adding solar or wind generation wherever the second resource is available, and prepare timelines for such conversions. NEPRA shall determine tariff or the additional generation and interconnection up-gradation if required. CPPA-G shall include purchase of additional energy in the Energy Purchase Agreements (EPAs). NTDC shall assist IPPs in inter-connection up-gradation design and approval.

Development of technical HR in ARE technologies is also a need of an hour. Accordingly, AEDB in consultation with the Pakistan Engineering Council (PEC) shall coordinate with national vocational and technical education institute and provincial and state TEVTAs for imparting annually targeted degrees/diplomas in alternative and renewable energy technologies. Thus, if the human race is to survive, we’re eventually going to have to switch over to completely renewable energy. At the moment, most of our energy comes from natural gases, coal and oil based energy sources. These energy sources are both dirty and unsustainable, while the green energy sources are environment friendly and sustainable

(Concluded).

Saud Bin Ahsen has done MPA from Institute of Administrative Sciences (IAS) Lahore and can be reached at saudzafar5@gmail.com