Electricity draws incessant howls of outrage from Pakistanis. From industrialists to lifeline consumers, from plutocrats to labourers; everyone is unhappy. Pakistanis demand cheap and plentiful electricity – everywhere all at once – and it is nowhere in sight.
A library can be filled with reform advice, reports, books, diagnostics, and the ‘way forward’ for the electricity sector published over the last three decades. Yet no subject is as resistant to positive change, and no other is as complex and consequential for the national economy. The sector has hundreds of thousands of employees spread in every nook of the land, has massive exposure to international donors, and has an annual turnover of more than Rs3000 billion.
The Power Division, which administers the electricity sector, is probably the most challenging assignment in the federal government. It has five distinct quagmires: generation, transmission, distribution, finance, and the regulator. This exceedingly complex morass gets compressed each month into a single piece of paper: the bill for the consumer.
The electricity bill is a summary of Pakistan’s historically poor governance. No wonder reading the bill is a nightmare. It is cross-hatched with a plethora of tariff categories, taxes, adjustments, and fees that have nothing to do with electricity. It is a vehicle for obtaining revenue that the citizens do not pay otherwise or the officials neither have the ability nor the integrity to collect.
On one hand, many regions of the country deem free electricity their ransom for staying with the federation or payment for a deprivation the federal government owes them to rectify. On the other hand, central regions pay for the brazen theft in other parts of the country.
In an insightful recent monograph on the subject, Prof Ijlal Naqvi calls electricity losses “an indicator of state capacity". The federal government collects bills in the areas where its state capacity is better – the five distribution companies beginning with Islamabad and ending at Multan. The rest of the country – north, west, and south – lies in a deep pit of theft and losses, precisely the areas where the writ of the state is feeble.
All is not despair, however. Although the public saw only higher bills, the 2022-23 PMLN-led government made the landmark achievement of shifting of balance in Pakistan’s electricity generation decisively towards domestic fuels. In a mere sixteen months, the Shehbaz Sharif government added more than 5000MW new generation capacity to the system, two-thirds of which is domestic or sustainable energy.
The addition included the completion and operationalization of pending CPEC projects, 1980MW from Thar coal alone. The K3 nuclear plant 1100MW was completed and put into operation as well as the Karot Hydroelectric generation of 720MW capacity. The state-of-the-art 1266MW Haveli-II LNG plant was completed and put into operation. There was consequently a remarkable decrease in loadshedding from summer 2022 to summer 2023.
Rules and processes for an open and free market for competitive trading and bilateral contracts in electricity were notified. The Advanced Metering Infrastructure (AMI) project was launched to install direct-reporting electricity meters for all industrial, commercial, bulk, and agricultural users nationwide.
Transmission lines for the Diamer-Basha and Sukhi-Kinari projects as well as downstream grid stations were launched to ensure ready evacuation before generation begins. One achievement on this account was the completion and operationalization of the crucial Thar-Matiari transmission line within four months. The landmark Pollan-Jeevani transmission line connecting Iran’s grid directly to Gawadar was agreed upon, built, and completed swiftly ahead of time and inaugurated jointly by PM Shehbaz Sharif and the president of Iran.
Shehbaz Sharif’s previous government restored electricity and rebuilt destroyed infrastructure swiftly nationwide in record time after the devastating 2022 floods. It also reduced the circular debt of electricity by Rs154 billion on June 30, 2023 compared to the record level on March 31, 2022 left by the previous government. Sharif’s government removed import duty on all components for domestic manufacturing of solar panels and removed GST on the import of solar panels. Moving ahead of the rest of the world, PM Sharif broke ground last summer on the 1200 MW Chashma 5, which will be the largest nuclear-powered electricity plant in the country.
Yet the killing piece of paper, the dreaded electricity bill remains. How to deliver inexpensive and abundant electricity to Pakistan? How to unshackle the consumer from crushing capacity charges? How to reduce the purported ‘theft’ but also the subsidies that are twice the amount of theft? How to reduce expensive electricity and increase less expensive electricity?
The answer is in one comprehensive phrase: energy transition. First of all, PM Sharif should reiterate clearly his previous government’s policy that all new power generation in Pakistan shall henceforth be based upon indigenous resources, of which major ones are: solar, Thar coal, hydel, nuclear, and wind. The new government should ensure full-steam progress on under-construction large-scale hydel-power projects at Dasu and Diamer-Basha. Ensure Chashma-5 is built at pace and commissioned.
Second, PM Sharif should revive and push in full force his 10,000MW solar initiative from 2022, beginning with the first 600MW. Part of the solar initiative is the extant proposal for thousands of 1-4MW rural-grid-based micro-solar plants and the conversion of all federal government-owned buildings to solar.
These projects foundered previously because of strict import controls that discouraged bidders. Now they are feasible eminently, all the more so because the international price for panels has declined substantially.
Third, replace all 33 million plus electricity meters in the country with AMI meters. This single technological innovation will reduce theft, enhance data collection, improve the quality of billing dramatically, and thereby enable further efficiency-enhancing and theft-resistant reforms.
Fourth, categorically reject all extensions of existing contracts with independent power producers (IPPs). Most of these contracts are due to expire in the term of this government (2024-29). Concurrently, negotiate with remaining contractors an extension in terms of debt instead of smaller current repayments.
Fifth, undertake massive reform in all five parts of the electricity sector and re-engineer the Power Division, which has become a hollow, under-qualified, and obsolete administrative shell. Nothing should be unthinkable when reforming. Nothing.
The above suggestions are by no means a comprehensive list but first steps towards mending a broken sector. These will perform indispensable pro-poor and pro-growth functions: reduce the price of electricity; reduce the strain on our balance of payments; and reduce carbon emissions.
If the current government has the will to reform, follow up, and do the tough work necessary, Pakistan’s future generations will benefit from clean, economical energy to generate new employment and power our coming economic growth.
The writer is a former member of the National Assembly. He tweets/posts @kdastgirkhan
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