Electoral compulsions, it seems, may finally force the government to manage the power sector more efficiently.
Sources told The Express Tribune that the water and power ministry is about to finalise a plan to minimise power outages during peak consumption hours in the summer in a bid to improve the government’s image in the run up to a likely general election later this year. The plan will be presented to Prime Minister Yousaf Raza Gilani for approval during a meeting to be held on March 22.
The plan involves a combination of two measures: providing natural gas to power plants that are currently not receiving any, and paying off the government’s dues to the power companies that have been crippled by the state’s inability to pay its electricity bills.
If successful, the country would still face a power shortfall of approximately 2,800 to 3,000 megawatts during the peak of summer demand. That, however, is much better than the 6,000-megawatt shortfall that is likely if the government does nothing. “Power outages would then be restricted to an average of four hours a day in urban areas and up to eight hours a day in rural areas,” said one ministry official familiar with the matter.
The government wants to begin providing natural gas to some of the most efficient power plants in the country, many of which are currently running on either diesel or furnace oil, which quadruples their cost of producing electricity.
There are four power plants, with a combined capacity of 850 megawatts, that are currently running on diesel because of a lack of gas. Another four plants in Faisalabad and Multan – with a combined capacity of 350 megawatts – are not running at all. All eight of these plants would be provided gas, though it remains unclear where that gas would come from.
“These are some of the most efficient plants in the country,” said Abdullah Yousuf, the chairman of the Independent Power Producers Advisory Council, a lobbying group, referring to the four plants running on diesel.
“Their efficiency rates reach about 51%,” he said. The laws of thermodynamics in physics state that 100% efficiency in energy conversion is impossible. A 51% efficiency rate is considered at par with global standards for thermal power plants.
The water and power ministry also wants to clear the circular debt that has piled up in the energy sector as a result of the government’s inability to pay its electricity bills and promised subsidies. Independent producers like the Kot Addu Power Company (Kapco) and Hub Power Company (Hubco) are running far below capacity because of the circular debt.
“The government will pay its dues to these plants first to help them run at full capacity during the summer,” said a water and power ministry official.
“The [circular debt] situation will start worsening in the next few days because of a lack of funds,” said Yousuf.
Senior officials at the water and power ministry admit that the circular problem is getting worse, with about Rs30 billion added to the stock of crippling liabilities every month. “About Rs18 billion of that is due to subsidies and Rs12 billion due to leakages,” said one senior ministry official, admitting that without a final solution to the circular debt problem, any fixes the government come up with would be ad hoc at best.
Published in The Express Tribune, March 15th, 2012.