There seems to be an uncanny parallel between the death of Julius Caesar in 44 BC and the birth of Independent Power Producers (IPPs) in Pakistan in 1994 AD as both are marked by betrayals that shaped history. The infamous 1994 Power Generation Policy could be considered the mother of all ills in the energy sector.
There seems to be an uncanny parallel between the death of Julius Caesar in 44 BC and the birth of Independent Power Producers (IPPs) in Pakistan in 1994 AD as both are marked by betrayals that shaped history. The infamous 1994 Power Generation Policy could be considered the mother of all ills in the energy sector.
In 1599 AD, Shakespeare, inspired by Caesar's betrayal at the hands of his trusted friend Brutus, penned the famous line in ‘The Tragedy of Julius Caesar’: "The fault, dear Brutus, is not in our stars, but in ourselves”. This line underscores the importance of personal accountability and the need for individuals to shape their destinies through their actions rather than attributing outcomes solely to fate. This theme deeply resonates with the subject of this article.
The recent discourse surrounding IPPs is perplexing. The more I delve into it, the more bewildered I become. The tragedy of lives lost simply due to the inability to pay electricity bills fills me and my fellow citizens with sorrow and shame. This prompted me to examine how we arrived at such a dire situation. While some may be indifferent to the past, understanding that the issues plaguing our power sector (and other sectors) are not new is crucial. Regrettably, these issues persist even over half a century later.
We must be fair, reasonable, and objective when assessing the causes and consequences of actions taken by those involved in shaping the future of the power sector in this country in the past. Some actions were taken with genuine intent, while others were laced with deceit. The outcomes, however, were often masked by a modus operandi of denial, deflection, and blame-shifting. Our country has faced one calamity after another, yet we seem to forget, forgive, and move on. This series of articles will ultimately propose actionable steps, though they are not a promise of salvation.
There is nothing inherently wrong with making money, even lots of it, but the manner in which it is made and at whose expense is a critical concern. This tragedy involves a complex story of repeated errors, omissions, and wrongdoings spanning more than six decades and culminating in a historic failure. It concerns electricity, a fundamental right enshrined in the 1973 constitution, which the state has failed to provide to all of its citizens.
The obstacles in the energy sector began to surface immediately after the formation of Wapda in 1958. These included a lack of generation capacity, reliance on cheap hydropower, transmission and distribution losses, low tariffs versus production costs, and poor recoveries. Many of these problems are still around.
Quantitatively speaking, in FY1959-60, a year after Wapda was formed, the installed power generation capacity was 119MW against a peak demand of 131MW, with consumption at 69MW. So, a shortfall of 47 per cent emerged, excluding a 22.8 per cent loss of generated electricity.
This speaks volumes about the fate that would later unfold. FY 1984-85 was when a framework for reforming the energy sector emerged with the assistance of the World Bank. Though the installed power generation capacity had grown to 5,477MW, only 2,143MW was being generated against a peak demand of 3,791 MW. This left a shortfall of 30 per cent, excluding a loss of 24.6 per cent of generated electricity.
Attention was first drawn to this problem by external actors, including the World Bank and USAID. As a precondition for a grant, system losses had to be reduced to 23 per cent by June 1988. Shockingly, over half a century later, we are still grappling with losses of 16 per cent in 2022-23, despite a surplus power generation capacity of 15,696MW against a peak load of 30,189MW.
This surplus capacity is a legacy of the 1994 Power Generation Policy, which was designed to address shortages and promote growth. In fact, our real surplus capacity today is around 23,885MW because we cannot transmit more than 22,000MW due to the country's limited transmission infrastructure. This left us in an ‘out of the frying pan and into the fire’ type situation as we needed to increase generation capacity but ended up with a huge surplus capacity instead.
Nepra’s State of Industry report for 2022-23 recorded 134,546.79GWh (Gigawatt-hour) power purchased against 112,891.2GWh sold, leaving the government to handle power-sector losses amounting to 22,284.99GWh. Shockingly, in FY 2022-23, the idle capacity (unused electricity generation capabilities) reached 30,189MW. This is where the notorious capacity charges come in.
Words fail to describe the pain and suffering among those who cannot afford to pay their electricity bills. No salvation is in sight either because the financial losses in the power sector have ballooned from Rs2 billion in FY1959-60 to Rs2.551 trillion to Rs2.7 trillion in FY2023-24. As for tariffs, they remained static at around Rs0.12 per KWh (Kilowatt-hour) from FY 1959-60 until they rose to Rs0.76 per KWh in FY1984-85.
By FY2022-23, the tariff ceiling had climbed to Rs43.79 per KWh and it has now increased to Rs48.8 per KWh. However, even this exorbitant tariff seems insufficient to cover our past and ongoing failures, given the ever-increasing cost of power generation inputs and the ever-declining value of the currency. Alas, our problems are not new, and the fault lies not in our stars, but in ourselves.
To be continued
The writer is a chemical engineer with experience in various fields.
