National Electricity Policy

The new National Electricity Policy 2021 being introduced by the government is focused on expanding the country’s generation capacity in a competitive, cost-effective and transparent manner. However, the policy has raised controversy in some quarters, particularly because of the exemption clause and how it deprives provinces from having a say on key decisions.

Those privy to the particulars of the draft claim that the policy violates Article 157(1) of the Constitution which obligates the federal government to consult the provincial governments prior to undertaking a hydropower project there. This would essentially deny the provinces from having a role in the power sector. It would also be a departure from the previous policy where provincial governments were deemed as significant stakeholders with the right to initiate power projects in line with their local needs and priorities.

There are also reports that under the new policy the centre would have the power to unilaterally choose strategic projects and exempt them from the policy’s applicability as it sees fit. Some are of the view that the policy could impact KP in particular because it does not appear to be very hydropower friendly—in which the province has an edge. The power purchasing policy in the future is based on indicators which are primarily influenced by reducing costs, which could result in a number of in-progress hydropower projects in KP being sidelined.

Compounding this concern is another clause which includes the cost of transmission lines as an integral part of generation. This would allow federal power purchasers to overlook hydropower projects as they would require an initial investment on transmission lines, but are in the long term more viable economically and environmentally compared to other sources of energy.

It is commendable that the government is devising a national level policy and planning for the future on an issue that has held us back for too long. However, if these reports regarding the draft policy are true, the centre will have to ensure that concerns at the provincial level are factored in so that there is buy-in at the national level.

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