Provinces’ nod to Power Policy today

2013-07-31T03:57:02+05:00 Ahmad Ahmadani

ISLAMABAD - To achieve the destination of ‘Roshan Pakistan’ mentioned in PML-N manifesto, the federal government is all set to get the nod of provinces on much awaited new power policy during Wednesday meeting of the Council of Common Interest.
Earlier, Sindh and Khyber Pakhtunkhwa were on different pages over a five-year National Energy Policy (2013-18) that was tabled for approval during a meeting of the CCI. Both provinces had expressed their serious reservations over not taking the provinces on board prior to formulating the power policy. They were of the stand that stakeholders must be consulted even before tabling the policy in CCI because without knowing the nitty gritty of the policy, how can they submit their nod on it. Upon this the CCI constituted a technical committee to resolve the reservations and concerns of the provinces before next CCI.
The technical committee held its meeting on Tuesday and partially endorsed newly drafted National Power Policy 2013 with a consensus that aggrieve provinces would raise their concerns in the meeting of CCI to be held today under the chair Prime Minister Muhammad Nawaz Sharif. Chief Ministers of four provinces are also set to participate in the CCI.
It is said that since the Centre has played its due role in time towards settling the reservations raised by the provinces especially Sindh and Punjab in last CCI and the provinces have also expressed their partial approval to newly-drafted power policy in Tuesday meeting of a technical committee of the CCI, approval of the National Power Policy 2013 from today’s CCI is confirm to some extent.
The new power policy aims at achieving the goals of social development and prosperity for the country, highlighted earlier as ‘Roshan Pakistan’ under which reduce utilisation of gas in CNG sector, CNG price hike, increase in the tariff of power and gas for all consumers besides poor domestic consumers etc have been recommended.  Available draft copy of National Power Policy 2013 discloses that the policy was formulated by a Power Policy Group and compiled by a special assistant to the Prime Minister Dr Musadik Malik instead of Ministry of Water and Power. The power policy group has changed the impact of national power policy 2013 if compare it with the impact mentioned in the National Energy Policy 2013-18, which was presented in past CCI.
“The successful implantation of this policy will lead to enormous improvement within the power sector. By 2017, the supply-demand gap could be eradicated completely; and by the end of the five-year term of the current government the country will have a power surplus, which can then be regionally traded. In essence, by the end of the decade Pakistan could be transformed from energy strapped, importer of power to a regional export of power.
The cost of power generation will be reduced to affordable amount, and the efficiency improvements in transmission and distribution will decrease the burden of power to the end consumer. In summary, prosperity and social development will become a reality in a Roshan Pakistan,” the policy reads. As per new power policy, loadshedding would witness an end by 2017 while power tariff would stay at Rs10/unit by 2017.
The National Power Policy 2013 proposes provision of uninterrupted but expansive electric power to the consumers fall in the categories of commercial, industrial and those power consumers who can afford generators to produce electricity for own use.  After paying wheeling charges to concerned power distributing companies (Discos) or NTDC, the power generating companies (Gencos) would then be able to sale the uninterrupted electric power to the private sector. Similarly, a mechanism has been evolved in the said policy to recover power sector dues. A hope of surplus electric power by 2018 and regional trade of power have been suggested. In essence, by the end of the decade Pakistan could be transformed from energy strapped, importer of power to a regional export of power.
Though draft of new power policy has not mentioned on what ratio the power, gas and CNG prices hike would be made yet officials at petroleum and power ministries have said that after getting the approval of CCI on National Power Policy 2013, power tariff hike by Rs3.07/unit would be done for all consumers except poor domestic consumers use 200 power unit in a month while increase in the price of compressed natural gas (CNG) ranging between Rs20 to Rs35/kg and a raise in gas price ranging between Rs100 to Rs600/mmbtu for all consumers other than domestic consumers who use less gas in a month would also be made.  Similarly, gas tariff of fertilizer, industrial, commercial sector and for captive power plants have been made equal with the price of furnace oil.
Interestingly, it is also mentioned in the draft that previous policy framework such as 2002 power policy may also continue to be operational. However, the 2013 power policy shall override any other policy in relation to energy issues to the extent of inconsistencies.
The power policy also proposes that ‘automatically adjust already agreed upon amounts owned by provinces and government dept to power sector from the NFC Award and department budgets. And, agree upon transparent procedure for future billing and collection’ and to ‘appoint independent reliable Adjuster to settle payment disputes with provinces and govt depts within a period of three to six months’.
“The strategy is predicted on collecting outstanding receivables from provinces and government departments. Federal Adjuster will be used to settle provincial bills. Forty to six per cent of the monthly provincial bills will be deducted up front by the federal adjuster. The remaining outstanding amount will be settled within 60 days through conciliation. GST (general sales tax) refunds will be collected from the FBR and a mechanism will be built to avoid future build-ups,” power policy 2013 reads.
To punish defaulters and eliminate theft, the power policy further proposes that eliminate transmission and distribution theft. Focus load shedding in areas where collections are low. Pass legislation that allows of defaulters connection to be severed. Defaulters connections are severed after 60 days of non-payment and defaulters will only be reconnected with pre-paid card based meters.
National Power Policy 2013 also suggests divert gas to the power sector as 10 per cent gas diversion can generate 2,000mw and ensure firm supply to the power plants, increase price for gas consumption for all users except for poor residential users and reduce utilisation of gas in CNG and UfG (Unaccounted for Gas) in particular.
The Government of Pakistan (GoP) will pass energy conservation legislation aimed at three key areas: a) technology/ product labelling standards, b) power time of use, and c) improving the energy efficiency of the existing and new infrastructure.
Energy services companies may also be encouraged in the private sector to audit and improve the energy efficiency of the existing industrial, commercial and residential footprint and create a culture of conservation and productivity.
The strategy may also impose timing restrictions for evening commercial activities and introduce ‘time of use’ metering to discourage utilisation during the peak hours by charging different rates for on and off peak timings.
The government is actively considering innovative business models including various wholesale business models supported by wheeling charges. These innovative business models once concluded may allow the generation companies to sell electricity to NTDC, Discos and private sector alike. Successful implementation of these models will encourage rapid investments in power generation, bring power generation closer to the load centres and result in electricity prices.
A significant push will also be made towards building medium and long-term hydel capacity in the country. Six projects totalling 388mw of hydel power are expected to be completed by February 2015. The smaller Patrind and Gulpur hydropower projects are expected to be completed by December 2017 and will add 247mw to the grid. An additional 969mw is anticipated from the Neelum-Jehlum HPP (hydropower project) by November 2016. A number of hydel projects are expected to come online in 2017 including the fourth and fifth Tarbela expansions which have the potential to add 1,910mw (1,410mw in fourth expansion, 500mw in fifth expansion).
The government is also poised to announce a coal corridor with a capacity to generate 6000-7000mw in the near future.
In the long run, large infrastructure programmes including the Indus Basin Cascade will be aggressively developed. Dasu has a potential of generating 2,160mw, Patan 2,800mw and Thakot 2,800mw. The detailed engineering for these projects is being carried out and will optimally be constructed using a BOT (built, operate and transfer) method.
Last but not the least, the National Power Policy 2013 says that target power and gas subsidy directly only at the abject poor. Provide more expansive but dedicated electricity to users utilising captive power and generators. Phase out subsidy over period of three years.

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