by khurram Hussain
THIS is beginning to look like a rerun of the previous government’s last year in power. Rampant load-shedding, riots and attacks on power-sector installations, soaring circular debt, allegations of fudging of demand and supply data, high-level meetings being repeatedly convened to get an assessment of the situation, and repeated promises that load-shedding will end by the close of the year due to new projects that are about to be commissioned. We’ve been here before and, four years after a government comes to power on the promise of breaking out of this cycle, we are here again.
Some things are different though. For one, back in those days the government put out daily demand and supply numbers, whereas now those figures are difficult to come by. For another, the government in those days convened repeated full court meetings in Islamabad of representatives from across the power sector, summoning CEOs of all private power producers as well as private consultants to the capital to brainstorm ideas on how to mitigate the problem. Of course, that didn’t help very much other than giving the appearance of some urgency to the matter.
This time the government is in go-it-alone mode, preferring to tackle the problem entirely on its own. Except for the third-party audit of the circular debt demanded by the prime minister, the last two meetings of the Cabinet Committee on Energy have been internal and private affairs. Of course, there is also the instruction from the prime minister to “include provincial representatives in decision-making on important issues related to the power sector” — whatever that means.
The situation looks the same because both governments have looked upon the power crisis with the same eyes. They both defined it primarily as a shortfall between power generation and demand. Having done so, they undertook to commission new capacity, then proudly announced that they were en route to eradicating the problem, once the new capacity kicked in. Well, new capacity to the tune of 2,400MW has kicked in since the same time last year, but the problem persists. How come?
New capacity is not going to solve much because the problem goes far beyond just a deficit between demand and supply. The deficiencies in the power sector are financial, technical and managerial as much as they are deficiencies of supply. With no data being provided by the ministry any longer on generation and demand, it is hard to say how many of our plants are continuing to run at full capacity, and how many are either shut down or running on partial capacity due to financial constraints and fuel supply problems.
New capacity is not going to solve much because the problem goes far beyond just a deficit between demand and supply.
In April, we had a massive spike in load-shedding because of an unusual spike in temperatures in the second half of the month, and the dams were shut down. We were told the situation would improve once the heatwave passed and hydro generation kicked in, and on the back of that promise, the government promised that load-shedding during the crucial hours of sehri and iftar would be controlled during Ramazan. That promise was shattered in the first two days of the holy month.
So we had a round of two meetings, during which questions were asked and fresh directives issued to bring the situation under control. Will that change things?
The real danger now is that a few vested interests are using the opportunity to redraw the power demand projections for future years and argue for commissioning additional power capacity. The use of national crises as a moment of opportunity by vested interests is an old gambit in our country (and many others too), but it is the government’s job to ensure that the public interest remains supreme.
At the moment, it appears that private vested interest may get its way. The present projections for demand show that the country will be surplus in power by 2021. Therefore, the case for commissioning more large-scale power generation plants cannot be made. But if these projections are tweaked upward, by using the April heatwave as a base for instance, and applying higher growth rates to future demand, the case can suddenly be made that we need to commission a few thousand megawatts more of generation capacity to meet the revised scenario.
What’s the harm, some may ask. After all, more power is better than less. Except that more power generation comes at a steep cost, in the form of capacity charges, and any future growth plan for the power sector has to draw a balance between the cost and the generation capacity. This requires the application of mind, not just rough estimates, if one is not to land up in a situation like the late 1990s, when over-capacity in the newly created private power sector drained more than two-thirds of Wapda finances, driving the organisation into the ground, and pushing then Prime Minister Nawaz Sharif to ask the army to take over the beleaguered institution.
What the power sector needs is not more power plants, but reform. From finances to fuel supply, from power pricing to transmission, the cumulative effect of all the weaknesses that weigh the sector down is what makes it nearly impossible to prevent the recurrence of load-shedding summer after summer. But successive governments have shied away from such reforms, preferring to focus their energy on commissioning new generation capacity alone. The result is the endless cycle that keeps bringing us back to the same situation.
In its present form, the power sector cannot deliver. It is too large, too centralised, and the exact wrong mix of public- and private-sector ownership to bring down costs, deflect the intrusion of vested interests, operate at higher efficiency, or attract investment in areas where it is sorely needed, like transmission and distribution. Until we have a government that has a vision that goes beyond a handful of smokestacks, unfortunately we will keep returning to this place endlessly.
Published in Dawn, June 1st, 2017