The litmus test: Nawaz gears up for ‘real’ power struggle

PM to unveil energy plan soon, increase in electricity tariff expected.

LAHORE:

In a bid to address what could possibly be the greatest challenge facing his fledgling administration, Prime Minister Nawaz Sharif will soon announce an energy plan for the first six months of his term.

The plan, which has been in the making since the results of the May 11 polls gave Nawaz the mantle of prime minister, is likely to result in an increase in the power tariff for industries operating round-the-clock, The Express Tribune has learnt.

Faced with the challenging task of delivering on his election promise to resolve the electricity crisis, Nawaz on Thursday presided over a meeting on the energy situation and sought concrete plans for delivering – initially- a short term respite in the debilitating load shedding facing the nation.

The significance of the electricity crisis can be gauged from the newly elected premier’s decision to take over the administrative charge of energy related ministries 15 days ago.

Thursday’s meeting at the State Guest House in Lahore is the first in a series of three high level meetings on the issue, and a plan will only be unveiled after the meetings are complete.

After concrete suggestions for dealing with the spiralling crisis are presented to the newly inducted prime minister, Nawaz is expected to announce his government’s short term measures against the energy crisis, once the plan is finalised in the last meeting scheduled on Friday, June 14. The formal unveiling of this plan will follow shortly afterwards, according to party sources.

A sketch of the plan

According to details, the architects of the new plan are reported to be the managing director of PEPCO and former finance minister Shaukat Tareen. In the initial stage the plan will seek to reduce load shedding to just three to four hours daily within the first six months.

Participants at the meeting have been informed that 1500 MW of electricity has been added to the grid, which improved the unscheduled load shedding. The six month plan is to increase electricity from 12000 MW to 15000 MW by December 2013 which will reduce load shedding duration down to four hours.

Payments to independent power producers (IPPs) and generation companies (GENCOs), last week, in addition to sureties extended to closed units, are also expected to give a welcome sigh of relief to the country.

Under the six months short term strategy, existing units will be operated to their maximum capacities, power generation targets will be established for each month, energy conservation would be encouraged and an audit of Karachi Electrical Supply Corporation (KESC) will be undertaken.

Trouble for KESC?

Nawaz has been informed that KESC is currently receiving 700 MW of electricity from WAPDA, while it has closed its own generation units. KESC has been receiving subsidised electricity to the tune of Rs 80 billion as the same electricity was being purchased by WAPDA from the expensive private sector at higher rates. In addition to the audit, KESC would be asked to produce its own electricity and to route 500 MW back to Punjab, after a few months the remaining 200 MW will also be withdrawn. An inescapable yet difficult decision in the plan is to increase the electricity tariff. Industries operating round-the-clock will now have to pay Rs 18 per unit compared to the existing Rs 15.

However, domestic consumers using less than 100 units will be spared the tariff increase. With the additional revenue, the government expects to purchase 300MW of electricity from the private sector.

Similarly, modern meters will also be installed on all lines emanating from grid stations across the country. These meters are expected to control line losses and electricity theft. In light of their inability to deliver, the government will also announce the replacement of all heads of distribution companies.

Reports suggest that after the initial six month short term plan, the government will start longer term projects addressing the energy shortfall in the country. These projects will include dams, thermal power plants as well as other low cost schemes.

Official statement

According to an official hand out, Nawaz in Thursday’s meeting vowed to put in place effective measures to utilise available resources to rid the country of the energy crisis.

The prime minister said, “I have to put in place initiatives which keep the industrial wheel churning and the fans in every home running.” The energy sector is one of the major priorities of the PML-N government, which would take all stakeholders on board to resolve this grave issue once and for all, he added.

The statement adds that the government plans to retire the crippling circular debt gradually and the premier has directed authorities to determine the viability of all electricity projects, including their financial requirements. Punjab Chief Minister Shahbaz Sharif, Pervez Rashid, Chaudhry Nisar Ali Khan, Ishaq Dar, Khawaja Asif, Shahid Khaqan Abbasi, former caretaker federal minister Dr Musadiq Malik, Shaukat Tareen, Salman Shahbaz, Mian Muhammad Mansha and various energy experts attended the meeting.

Published in The Express Tribune, June 7^th, 2013.

Correction: An earlier version of the story erroneously stated that 1500 MW of electricity will be added to the grid. The error is regretted.