Govt seeks World Bank help to tackle growing solar power burden

ISLAMABAD: The government has turned to the World Bank for assistance in addressing the growing burden of capacity payments, as the country's energy sector grapples with the impact of increasing solar power generation.

The private sector’s import of solar panels has reached a substantial capacity of 6,800 megawatts (MW) and people are more inclined to go off the grid by installing solar panels on their roofs.

The people have already managed self-generation of 3,000 MW by solarization through net metering.The visiting mission of the World Bank, headed by Martin Raiser, South Asia Regional Vice president of the Bank, met on Monday with top mandarins of the Energy Ministry (Power and Petroleum Divisions).

Minister for Petroleum Dr. Musadik Malik and Minister for Power Awais Leghari led their teams in the joint meeting with the World Bank on ongoing energy reforms and the government initiatives to improve both petroleum and power sectors.

“The solarization by consumers has caused an increase in capacity payments volume, reaching Rs2.2 trillion, due to which the burden has increased by Rs1.90 per unit for those who have not solarized,” one of the officials who attended the meeting told The News. However, on this particular issue, the World Bank showed its inability to come up with an instant solution for tackling the increasing capacity payments issue in the wake of solarization by consumers.

In addition, the World Bank has offered a portfolio of 15 million dollars for technical assistance in preparing the documentation, arranging consultants and Financial Advisers, and conducting due diligence of the less and high loss-making electric power distribution (DISCOs).

The World Bank was told that the Shehbaz government has decided to privatize all the DISCOs in Punjab, which include MEPCO, LESCO, GEPCO, FESCO, and IESCO (in Capital), and hand over the high loss-making DISCOs—HESCO, SEPCO, PESCO, and QUSCO—to private management through long-term concessions for 25 years. “The government wants technical assistance from the World Bank for this effect.”

The World Bank mission responded positively, saying it has a portfolio of 15 million dollars for the technical assistance needed for the privatization of some DISCOs and handing over some to private management through long-term concessions. The Power Division also asked for funding for the upgrade and transmission and distribution system, and the World Bank mission, in return, asked the government authorities to enlist the projects, and it would positively respond to the demand of the government seeking funding for the upgrade of the T&D system.

However, a statement issued on Monday said both sides exchanged their ideas regarding the reforms agenda and discussed in detail the support World Bank is providing to Pakistan in the form of technical assistance.

Minister Malik expressed his profound gratitude for World Bank's consistent support for reforms in the energy sector. Technical assistance from the World Bank goes a long way and helps us in structuring many governance models. "We have separated the Tariff of rich and poor," remarked the minister.

He outlined the areas in the gas sector where joint efforts could yield significant benefits for stakeholders across the value chain. The World Bank has expertise in the governance framework, and Pakistan would benefit a lot from the World Bank's global experience.

Power Minister Leghari appreciated the collaboration with the World Bank aimed at bolstering efficiency and service delivery within the power sector. He stressed the need for enhanced cooperation for the privatization of DISCOs. A joint working group will be formed for the betterment of the transmission and distribution network. He touched upon the initiatives already undertaken for system efficiency, including the restructuring of BoDs of DISCOs.

Martin stated that energy is the key focus area and pillar of the World Bank's engagement with Pakistan. He showed full commitment to working together and providing all support for structural reforms to shift to a low-cost energy mix. The link between the gas and power sector is fundamental to balance out the circular debt.