Energy projects under CPEC
Energy projects under China Pakistan Economic Corridor (CPEC) would add 17000MW to generation the federal cabinet was informed by the Ministry of Planning, Development and Reforms, headed by Ahsan Iqbal. There is no doubt that the PML-N government has focused on electricity generation and has allocated massive funds from Public Sector Development Programme but as a second priority after road construction; unfortunately, though this has been to the exclusion of all other concerns relating to the energy sector. That these concerns are insurmountable has been evident given the escalation in the circular debt from what was inherited by this government in 2013, currently estimated at more than a trillion rupees, sustained poor governance, and delay in restructuring distribution companies to minimize losses.
Additionally, the paucity of funds and poor governance led to heavy borrowing by the sector, domestically and from external sources, with consumers being compelled to pay the cost of this borrowing that, in turn, accounts for higher electricity tariff relative to our competitors abroad. It is little wonder that the country’s exports are on a downward trajectory for a year and a half.
But what has been the biggest flaw in the energy policy of the incumbent government has been the inordinate focus on generation while ignoring the shortcomings of the transmission and distribution network. In 2010, the third party audit undertaken by the Asian Development Bank with respect to the rental power projects unearthed two prevalent disturbing factors in the sector:
- The generation capacity was over 20,000MW, enough to ensure no more than a couple of hours of load shedding per day.
- The fact that load shedding was over 10 to 14 hours in cities and over 18 hours in rural areas was due to the sustained failure of the government to ensure capacity generation. A few months before the PML-N government was sworn in, the Secretary of Water and Power Ministry revealed yet another factor responsible for untenable load shedding hours: the capacity of the transmission network was no more than 15000MW or in other words, even if capacity generation could have been realized it could not be transmitted to consumers.
One would have assumed that given these facts that were widely disseminated by the media the PML-N stalwarts would have paid heed to the transmission network before focusing on generation. That the focus to this day remains on generation with the PML-N’s tenure due to expire in a couple of months is evidence of a flawed five-year energy policy. Currently, with the onset of summer and higher demand tripping has become frequent, reflecting the limited capacity of the transmission network.
Water and Power Minister:
The then Water and Power Minister, Khawaja Asif, had claimed that the country’s transmission network has been strengthened to 16500MW. Even if one accepts this as credible, yet this is well below the generation capacity of over 20,000MW identified by ADB in 2010.
A reflection of the continuation of this flawed policy can be gleaned from the fact that work remains stalled on the 2.1 billion dollar Matiari-Lahore 660 kilovolt High Voltage Direct Current transmission line, a part of CPEC envisaging 873 kilometres from Matiari to Nankana Sahib district to Lahore (of which 314.9 kilometres will be in Sindh and 550 kilometres in Punjab). This is for three reasons:
- Failure to agree on the money to be allocated to the revolving fund to be used for payment to the Chinese company in case of delay in payments.
- The Chinese want the National Transmission and Despatch Company to purchase parts from China and supply it for the operation and maintenance of the project while the government wants the Chinese company to undertake this task.
- Delay in setting up four coal power plants in Thar that were earlier commissioned in May 2020 but are now expected to be operational by November 2020. These differences prompted the government to delay signing an agreement on another HVDC transmission line of 660kV – between Port Qasim and Faisalabad.
To conclude, despite a laudable increase in generation capacity there is an urgent need to revisit the power sector strategy by the government in a more holistic manner, though one supposes it is too late for the incumbent government to rectify its own short sighted policy decisions in this regard.