From deficient energy to energy inefficiency

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KARACHI:

Pakistan’s energy problem has always been a political rather than a technical subject.

The occasional on the move decisions and short-term planning made things worse over time. Each new government comes to criticize the previous one for the mess.

For example, the Muslim League of Pakistan-Nawaz (PML-N) accused the leadership of the Pakistan People’s Party (PPP) of bribery and of giving undue favors to independent power producers (IPP). The current Pakistani government of Tehreek-e-Insaf (PTI) blames its two predecessors for the increase in circular debt, which hit a staggering 2.37 trillion rupees and, subsequently, the International Monetary Fund ( IMF) demanded a further increase in electricity tariffs by 1 rupee. .4 per unit.

In the past, we were always told that the most expensive electricity is the one we don’t have, however, the excess capacity we built isn’t cheaper or cleaner either and not all megawatts are not created in the same way.

Out of a total generation capacity of 37,271 megawatts, Pakistan’s dependence on thermal sources (including nuclear) stands at 68%, while the remaining 32% is generated by renewable methods.

My two-year article titled “Coal Share in Power Generation May Reach 18%” questioned the growing share of coal-based power generation in thermal space, which has now grown to 32% and is expected to increase further after new coal-fired power plants, with a capacity of 4,590 MW, will be operational by 2026.

Growing reliance on liquefied natural gas (LNG) and coal will prove to be a threat during the winter season given the post-Covid disruption of the global supply chain and tightening energy and materials markets raw materials, in addition to a decline in the production of renewable sources.

As a result, the Richard Bay coal price has fallen from $ 57 to $ 137 per tonne (140%) since the start of 2021 while the cost of LNG (excluding GST per PSO) has fallen from $ 6.8 to $ 9. , $ 66 per mmbtu (41%) in the same period.

Now that we have an oversupply, we must finally focus on the efficiency of transmission and distribution of the entire electricity grid.

In my article “Power Companies Can Reduce T&D Losses Despite Limitations,” I outlined the responsibilities of utility companies to reduce technical losses.

However, according to the State of the Industry 2021 report released by the National Electric Power Regulatory Authority (Nepra), distribution losses in the CPPA-G system amount to 17.95%, while losses of K-Electric amounted to 20.6%, peaking in total. losses of 25,915 GWh for the entire system.

On the other hand, due to frequent power outages and unplanned load shedding, industrial consumers mostly rely on captive power plants instead of using grid power, further inflating circular debt.

Nationwide power outages such as the one seen in January 2021, coupled with occasional power line trips, exposed vulnerabilities in the distribution network.

Now that the PTI government has moved from a “take or pay” strategy to a “take and pay” strategy, it must continue to transition from a monopolistic and regulated energy market to a competitive / tradable, market-based model.

This transformation will eventually force the power generation / distribution companies to improve their efficiency, break the monopoly controls of single electric utility companies such as K-Electric and introduce a micro-grid system to reach the customers. remote areas that are currently off-grid. .

On the consumer side, incentives should be provided to residential and commercial users to motivate them to introduce technologies such as a central / district heating and cooling system as well as energy efficient manufacturing processes and equipment to reduce costs. waste.

At the government level, a public transport system should be developed in megalopolises with electric buses and metro infrastructure rather than inducing individuals to purchase electric or gasoline vehicles, which are neither economically favorable nor feasible in due to the lack of a national charging network.

As the PTI government plays its final round in the run-up to elections, it should not bow to IMF pressure and further penalize honest consumers for inefficiencies, losses and theft. Instead, the government should create a more competitive and market-driven power generation and distribution system to fuel its ambitious growth plans.

The writer is passionate about financial markets and is committed to Pakistan’s equities, commodities and emerging technologies.

Posted in The Express Tribune, October 18e, 2021.

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