ISLAMABAD - In sizzling summer, the country and the people have to bear brunt of power load-shedding is mainly due to in-efficiency of the former PTI government for not taking timely decisions to arrange fuel for power plants besides intentionally slowing pace of work on Pakistan’s cheaper and indigenous power projects.
Coupled with high and rising energy prices in the international market, Pakistan’s power sector is almost in the operation theatre and simply keeps it going is a miracle of a kind not known before in this sector.
According to documents available with APP, the previous government delayed 720 MW Karot Hydro and 1214 MW Shanghai Thar coal indigenous power projects on account of lack of ownership, project monitoring and failure to fulfill contractual commitments on already completed projects respectively, thus delaying financial close. The previous government either did not understand the CPEC’s energy framework or was simply out there to strangle it to slow but sure death.
The government’s failure to open revolving account for completed projects like Sahiwal Coal and Hub Power meant no further financing for energy sector under CPEC umbrella.
Similarly, another high RLNG based 1263 MW efficient Trimmu project has been delayed for more than three years due to ill-placed enthusiasm for witch hunt through NAB and then deliberate delay in achieving financial close.
Had the said three projects having accumulative capacity of 3200 MW been completed in time, load shedding in urban Pakistan would not have been witnessed despite high energy prices in the international market.
The PTI government also failed to enter into long-term LNG contracts when LNG price was lowest at the international market. There has been lack of planning to execute long term contract for purchasing RLNG.
During the COVID-19 (Mid 2020) the RLNG prices went far lower in the international market, but that opportunity of buying RLNG at USD 3 to 5 per MMBTU was not availed by the then government and no long-term contact was entered at that stage.
If such contract had been signed, consumers would have received much lower electricity bills. The average purchase price of the RLNG under the long-term contacts which was signed by the PML(N) government has been at price of USD 8.02/MMBTU between 2018 to 2022 whereas during same period on-spot average price has been USD 9.44/MMBTU, despite huge price dip for two years in the same period on account of COVID 19.
Much greater loss has been incurred during recent months wherein spot buying of RLNG has been as high as USD 38/MMBTU. It is a classic case of missing the stitch in time that saves nine.
Piling of huge circular debt and high cost of dollar are also cause of power load-shedding. The Circular debt stock in June 2018 was Rs 1,152 billion, which increased to Rs 2,467 in March 2022, an increase of 114 percent, despite major injection out of taxpayer’s money.
One of the major causes of this rapid rise in circular debt is the depreciation of Pakistani rupee value from PKR 115 per dollar to PKR 191 per dollar under the watch of PTI government and under the watch of the caretaker arrangement that was put in place to bring PTI government into power.
The rise in circular debt has affected the government’s ability to pay privately-owned power plants in a timely fashion which, in turn, has piled up liabilities of coal power plants and dried their credit lines. So much so, three major power plants on coal with total 3900 MWs capacity have such low stock of coal that they are running on part load. In case of one coal power plant, coal is stuck at Karachi port because it has no money to clear the imported stock.
Apart of the said above reasons, the prices of imported fuel like furnace oil, coal, RLNG have witnessed roughly 300 per cent increase in last 18 months at the international market.
