CSS 2019 Solved Current Affairs Past Papers | Critical Review of Pakistan’s Energy Policy 2013-2018
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Question breakdown
This question has one part, which requires a critical review of Pakistan’s energy policy from 2013-2018
Outline
1-Introduction
2-Energy Policy 2013-2018- Salient Features
- ✓Philosophical Inputs
- ✓Estimation
- ✓Governance Strategies
- ✓Operational Strategies
- ✓Demand-Supply Management
- ✓Affordability and Cost Effectiveness
3-Strengthening points of Pakistan’s Energy Policy 2013-2018
4-Critical Analysis
5-Conclusion
Answer to the Question
Introduction
The aftermaths of continuous power breaks and nationwide protests finally urged the newly elected government to design a pragmatic framework for a new energy policy to address the reservations and resentments of the public, industrial and commercial sectors. The Council of Common Interest (CCI) has already drafted the same energy policy, accentuating the federal and provincial integrated efforts to meet the electricity shortage throughout the country. The existing socio-economic ills, closely linked to the ongoing energy crisis, extend to the widening demand and supply gap where the demand has outstripped the current production capacity. The poor infrastructure and installations, inadequacies in the distribution and transmission of power, and cost-effective power generation are the pinpoints set to be achieved decisively by 2018. However, the instability of political conditions and corrupt working environments may havoc the greater challenges of implementing the result of policy.
Energy Policy 2013-2018 Salient Features
Salient features of Pakistan Energy Policy 2013-2018 that have been aimed to bring under the national action plan are highlighted below;
- Subsidy Clause:
It has been decided that no subsidy would be given to the power sector until the complete output has been received. The subsidy was given to the power sector upon completion of each production phase. The subsidy will only be rewarded after the final energy production output. The soaring inflation pressure is creating halts in the affordability of essential commodities for common people, and the phased-given subsidies will add up to an extra burden on the lives of citizens.
- End of Load Shedding:
The year 2017 has been decisive in ending load shedding, and 2018 has been marked as the year of energy surplus. The efficient utilization of all-natural and renewable resources with a strategic plan and implementation would only make it possible to achieve the targeted month of 2017 to end the energy shortage.
- Privatization of Power Plants:
Pakistan has decided to privatize 25 state-owned entities to balance the profit and loss. Four are power plants, two of which are over 1200 MW. The purpose of this is to reduce the cost of electricity production from double digits to single digits by combining private sector plants with a few power distributing companies.
- Reconciliation of Energy Institutes:
A special committee will be formed to reconcile the working and governing structure of the water and power ministry and the National Electric Power Regulatory Authority (NEPRA) to pay the unpayable dividends to the stakeholders. All the provided appointments will be made merit-free, irrespective of any political pressure.
- Financial Sustainability within the Sector:
The working committee will ensure the adjustment of outstanding payments for the Oil and Gas Regulatory Authority (OGRA), which government and private bodies are liable to pay.
- Enhancement of Provincial Government Role:
Region-wise transmission would be deployed to enhance the provincial government’s involvement and engage regions in managing electricity distribution to address inadequacies in energy management, distribution, and productivity.
- Philosophical Inputs
Philosophical inputs are important to discuss here as these are the traits without which the drafted energy policy couldn’t brought into implementation. However, they sound impressive to read but are challenging to deploy in prevailing corruption. Transparency, effectiveness, honesty, accountability, achievement, responsibility and efficient financial management are the key inputs to generate inexpensive electricity for all industrial, domestic and commercial sectors, diminishing pilferage and contamination in fuel distribution and ensuring efficient power generation.
- Estimation
According to the Council of Common Interest (CCI), it has been gauged that the successful execution of the national energy policy will fill the hole in supply and demand by 2017. By 2018, the power plants will reach their surplus in productivity. The surplus has been projected, focusing on the electricity demand, which has outstripped the generating capacity up to 4500-5000MWs. The cost-effective production has been targeted to ensure till 2018, concerning the inflationary rates of electricity Rs 12/unit, as the more significant chunk of energy productivity depends upon the unaffordable thermal resources, which accumulate approximately 44 per cent of total production.
- Governance Strategies
The Council of Common Interest has aimed to strategize the governing policies by forming the Financial Efficiency Strategy (FCS), punishing private sector defaulters, and proposing the disconnection of the power supply if the non-payment duration exceeds the 60-day deadline. The federal and provincial governments are advised to come to one page against gas and electricity theft. To curb these hurdles, defaulters and guilty must gain reconnection with pre-paid meters. NEPRA and OGRA have also aimed to improve efficiency in delivering new national policies successfully.
- Operational Strategies
To deliver governance and estimated target of national policy, a few operational strategies are brought under consideration;
- Generation Strategy:
Structured framework to enhance the working of plants through methodological testing of heat rate and allocating fuel to the more credible plants based on merit and generating capacity. These allocations will be made online to ensure merit transparency and call forth the privatization of GENCOs.
- Transmission Strategy:
UpgradedSupervisory Control and Data Acquisition (SCADA) software must be deployed to ensure transmission transparency and monitor losses. The internal audit control team will be assigned to consign the economic order and deliver it to the system’s end installer. The strategy also aims to reinforce 220 KV rings around the regions, widen high-voltage transmission lines and install plants near load centres.
- Distribution:
The heads of all distribution companies and their respective boards will stamp the performance contract and be considered accountable for distribution losses and technical inadequacies such as theft, corruption, and lack of recovery. The executive engineer will supervise the accountability of smart meters, which will be installed at the feeder level to gauge profit and loss.
- Demand-Supply Management
To manage demand and its effective utilization, a few result-oriented and time-based restrictions are planned to impose strictness on commercial activities during evening hours and implement metering to minimize usage during peak hours through different rate offers. Some alternative power solutions, such as solar energy, streetlights, electronic media marketing, and signage, will be encouraged for end users.
Local and foreign investment will be given attractive subsidized packages to manage the required supply demand to encourage and expand power generation capacity. Privatizing power plants is one of the strategies for dealing with supply management.
- Affordability and Cost Effectiveness
Production reliance will be segregated on other sources, including biomass, hydel, gas, coal and nuclear energy, to gain affordability and cost-effectiveness. Foreign and local investment will be directed to gain interest in building hydel power projects, and selected hydel projects will brought under the private sector. Pakistan’s close friends, such as China, will be invited to collaborate to construct LNG terminals. Building coastal energy corridors comprising imported coal and its proliferation, majorly focusing on Thar coal and converting Residual Fuel Oil (RFO) plants to coal, are the respective aims to achieve low-cost production and to lessen the burden for the public.
Strengths of Energy Policy 2013-2018
Analyzing critically the strong points of national energy policy, which seemingly depict the comprehensive approach toward the achievement of policy objectives;
- The framework from 2013-2018 aimed to meet both demand and supply comprehensively. Other factors also focus on efficient production, transmission and distribution, ultimately adding to energy conservation.
- Diversifying the production resources to lessen the burden on thermal plants is also included in the policy agenda. Other means of production, including renewable resources, hydropower, biomass and nuclear energy, are expected to be implemented.
- An increase in production capacity through other power plants will be enacted through new plants based on coal-fired, LNG and hydropower projects to manage overall capacity generation.
- The private sector will be encouraged to be involved in meeting the efficiency of power projects.
- Upgraded systems and software will be deployed in distribution and transmission infrastructure to check losses and ensure efficient delivery.
- New reforms with restricted punishments are aimed to be introduced in the administration of overall production management, financial sustainability, and energy sector transparency.
Critical Analysis
Critically analyzing the energy policy of 2013-2018, few of the policymakers have cast their criticism over the drawbacks of this policy. They believe that despite all the actionable frameworks, there will always be a gap in the smooth delivery of these energy goals. Many energy projects face hindrances in completion because these projects never materialize in the mentioned timeframe. Lack of coordination between federal and provincial governments hampers the effective execution of policy. Analyzing the pros and cons of private sector involvement may affect the quality reliability, decreasing the generating capacity.
The fear of relying heavily on imported coal and LNG for production may increase the foreign debt if it doesn’t meet the adequate supply and demand. Upgraded infrastructure and system would also need time-to-time maintenance, which could be costly, and problems related to electricity theft, inadequate distribution to the end user and payment recovery procedures have not been addressed in the past and may face the same unresolved condition in future as well. The unstable political condition of the country may provide a discouraging environment for local and foreign investments, which will slow down the manufacturing and production of energy, and the target of cost-effective electricity would become difficult to generate.
Conclusion
Allegedly, the newly designed national policy seems to be result-oriented, focusing on increasing the capacity from the current 12000 MW to 26000 MW in the medium term, reducing production cost from Rs 14 per/unit to about Rs 10 per/unit, but this only seems to be realistic on paperwork unless the philosophical inputs such as transparency, fair accountability and efficient production, are brought into practice. Accelerating imported electricity from neighbouring countries, such as 1000 MW from Central Asian States, 500MW from India and other 1000MW from Iran and altering public sector plants with public-private based plants may bring some results. Changing world dynamics from geo-strategy to geo-politics is another obstruction in the execution of TAPI and other world projects, which will badly affect the stakeholders of the projects.
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