Government calls for special meeting to solve power crisis

ISLAMABAD — Pakistan government has convened a special meeting here today to take into account the growing energy shortfalls that could disturb official plans to invite foreign investment by the Private Power Producers (IPPs).

By A Correspondent

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Published: Tue 27 Feb 2007, 9:10 AM

Last updated: Sat 4 Apr 2015, 8:31 PM

Informed sources said that the meeting to be presided President Gen Pervez Musharraf would listen to various viewpoints why some investors of wind and thermal projects were asking for higher tariffs for establishing more power plants in the country to meet the increasing electricity shortages.

The President would also review the status report of projects lined up by the relevant agencies to meet immediate energy shortage as summer season is about to start and is expected to face shortage peaking to 2000MW.

The meeting will be attended by ministers and officials of water and power and petroleum ministries and heads of Wapda, Alternate Energy Development Board, National Electric Power Regulatory Authority (Nepra) and some wind power producers.

These sources said the President would also be briefed about the commissioning of second-hand imported power projects on rent from the United States which is likely to be complete before peak summer to produce about 300MW of electricity. While this would enable the Wapda towards better load management, the country-wide load shedding may still remain unavoidable given acute transmission problems in the system, official sources said.

A lot would depend on hydrology in the coming months but the water and power ministry has been focusing on staggering maintenance schedules of power projects to minimise the impact of shortage. While the issue of IPPs arrears would also come under discussion, the meeting would deliberate why the tariffs approved and announced by the Nepra for wind and thermal projects were being revised again and again.

The government is anticipating the energy crisis to worsen in the next two years due to a 50 per cent increase in the demand and a rather slow improvement in the supply. The power shortage that has been estimated to remain in the range of 1000-2000MW during the current year is likely to cross 3,000MW next year and to increase to about 5,300MW by 2010. Overall, Pakistan's total energy requirement is expected to be around 80 million tons of oil equivalents (MTOE) in 2010, up by about 50 per cent from the current year's 54 MTOE.

Earlier, the power tariff agreed to by the government with the new thermal power producers at about 13 cents (Rs7.8) per unit is estimated to touch 29 cents (Rs17) per unit in the final year of plant operation about 25 year from now.

This estimate has been made by experts of National Electric Power Regulatory Authority (Nepra) on a sample 100MW thermal power plant based on residual fuel oil and diesel. This in-house exercise has been made after making indexation on the basis of five per cent projected increase in the price of furnace oil.

In comparison, a hydel power project based on same 100MW capacity would cost only 3.39 cents (Rs2) per unit even if the current prices are indexed on 50:50 per cent basis with the inflation in the United States and in Pakistan and could provide a saving of about 25 cents (Rs15) per unit over thermal project after 25 years.

The exercise reaches the conclusion that a hydel power project of 100MW could provide a cumulative saving of Rs170 billion over a 100MW of thermal power project over a period of 25 years. The associated benefits of hydel power projects in the shape of environmental loss, foreign exchange saving on fuel cost and the saving owing to longer life of the hydel project have not been taken into account for an "apple-to-apple" 25 year comparison between the two technologies.

At present, Wapda's average power generation cost is around Rs3.5 per unit and its average consumer tariff is about Rs4.09 per unit. Under the 1994 power policy, about 15 IPPs are selling about 3,000MW to the Wapda and KESC at a levelised tariff of 5.7 cents per unit, although their tariffs sometimes cross 11 cents per unit at present.

The exercise suggest that thermal tariff approved by the Nepra would begin with little over 13 cents per unit in the first year of project operation compared with 11 cents of the hydel tariff and hence a 100MW plant of hydropower would provide a saving of Rs1.08 billion in the first year over a thermal plant.

It says that Nepra approved tariff indexed duly with five per cent annual fuel cost escalation for thermal project would raise the actual tariff to 17.86 cents (Rs10.7) per unit compared with 10.04 cents (Rs6) per unit of hydel plant. As such, the annual saving from hydel project would reach Rs4.11 billion as the per unit difference between the two tariffs would reach 7.82 cents (Rs4.69) per unit.

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