Daily Times

The Pakistan Institute of Development Economics (PIDE), under the guidance of its Vice-Chancellor Dr. Nadeem ul Haque has formed a PIDE Power Commission’ to research and find out solutions to the long-standing energy sector problems.

The commission comprises power sector experts with decades-long experience in the sector, say a press release issued by the Institute on Sunday. Pakistan’s power sector has been in crisis for years. Too many players in the system confuse each other to cumulate losses and give subsidies while at the same, the circular debt is rising continually. Surprisingly, no government has taken the power sector with the urgency it deserves, and no serious research has gone into understanding the issues. Whatever decisions are made are at the advice of international financial institutions, who do not understand the local dynamics of the problem.

The members of the Commission include Engr. Tahir Basharat Cheema, Former MD, PEPCO; Engr. Salis Usman, General Manager Power Planning, NTDC; Engr. Mujahid Islam Billah, Ex. CEO, FESCO; Mr Basharat Ali, CFO, PEPCO; Engr. Sajad Haider Syed, Dy. Manager, NTDC; Engr. Masood Akhtar, Former GM, NPCC; Engr. Azhar Iqbal, Director Finance, PEPCO; Engr. Adnan Riaz Mir, GM, Monitoring, PP&MC; and Engr. Abdul Qadeer Khan, Ex GM, NPCC. Energy is a chronic problem that eight governments have not been able to solve. Due to mismanagement and weak governance in the power sector, massive transmission & distribution losses occurred (Rs. 473b during 2021, out of which Rs402 recovered through tariff and Rs71b was added to circular debt).

Our decision-makers’ lack of informed long-term vision has led to distribution inefficiencies, expensive fuel mix, and rising capacity payments. The results are unreliable electricity supplies, unaffordable electricity, and increasing business costs. The demand-supply gap has evolved over the years from deficits to excess installed capacity. Still, there is a shortage of cash flows to import fuel and supporting infrastructure to run it, leading to power outages. According to the press release, with contributions from the experts in the Commission, a major study is underway at PIDE. This soon-to-be-launched study would provide deep insights into various segments of the power sector, providing workable, sustainable, and integrated solutions to the power sector woes.

According to PIDE, more than 60pc of electricity is produced by thermal sources providing costly electricity in Pakistan. Further, the tariff mechanism adopted provides electricity charges across categories, time of use and sanctioned load, etc., creating inefficiencies and making electricity expensive for productive sectors (industry and businesses) of the economy. Additionally, Pakistan is among the top thirty countries globally with relatively high tariff rates. Due to long-term agreements with guaranteed capacity payments to thermal generation companies, switching to cheaper indigenous energy sources is impossible in the short to medium term. Therefore, the complex tariff mechanism needs to be revised to reduce electricity prices in Pakistan. The sector is about to implement a wholesale market model (CTBCM), demanding significant tariff reforms. There should be fair pricing, where each consumer pays according to their consumption on a progressive trend, i.e., the more per unit energy is consumed, the more consumer pays on average.