ISLAMABAD: The Economic Survey 2022-23 entirely ignored the power sector’s ballooning circular debt and did not mention a single word, indicating that the government does not want to tell the nation about the hyper increase in debt. This amassing power sector circular debt has become a serious threat to the fiscal sustainability of the sector. Last year by end-march 2022, its volume was Rs2.467 trillion or 3.8 per cent of GDP. Over the years, the debt increased fast in size. In 2008, it was Rs161 billion, in 2013, it was at Rs450 billion, then reached Rs1.148 trillion in 2018. At the same time, the gas sector’s circular debt is also increasing, but the Economic Survey 2022-23 did not mention it. Dependence on liquefied natural gas (LNG) has increased in recent years due to depleting indigenous natural gas deposits.
Over the past four years, the stock of circular debt in the gas sector has increased nearly four-and-a-half-time to Rs1.6 trillion, increasing from Rs350 billion in 2018, an official said. It may be noted that each year, hundreds of billions of rupees in capacity payments are made to Independent Power Producers (IPPs). But at the same time, besides capacity payments, their inefficiencies (DISCOs) have been a major drag on the sector’s financial health, as there are high losses and low recoveries. The power transmission and distribution inefficiencies are hampering the sustainable deliveries of energy services, leading to higher energy prices and increased costs of doing business.
Although the government did not give information regarding the increase/decrease in installed capacity, it has said that the current capacity is 41,000 MW. Last year, the economic survey reported it at 41,557 MWs, indicating a decrease. In FY2021-22, it increased by 11.5 percent (or 4,296 MWs) from 37,261 MWs. Of the 41,000 MWs, the percentage share of hydel was 25.8 percent, thermal 58.8 percent, nuclear 8.6 percent, and renewable 6.8 percent. The share of thermal as a dominant source of electricity supply has declined over the past few years, showing an increased reliance on indigenous sources.
On the other hand, against total electricity generation of 94,121 GWh, the share of hydel, nuclear, and renewable is combined as 53.8 percent, which is a good sign for the economy and the environment. The survey, however, said that the government aims to achieve a 60 percent share of electricity generation capacity through indigenous clean energy technologies (ARE and hydro) by 2030, based on the Indicative Generation Capacity Expansion Plan (IGCEP). The draft of IGCEP 2022, prepared by the National Transmission and Despatch Company (NTDC) and currently under approval with the National Electric Power Regulatory Authority (Nepra), projects the country’s demand at 41,338 MWs and an installed capacity of 69,372 MWs by 2031 as the base case.
The government aims to convert all commissioned imported coal Independent Power Producers (IPPs) to Thar coal. A feasibility study, conducted by the Ministry of Energy (Power Division), recommends on-site testing of 10 percent Thar coal blending with imported coal. Efforts have begun to blend Thar coal with imported coal for Sahiwal, Port Qasim, and Hub coal projects, with a combined capacity of 3,960 MWs. Pakistan is transitioning to indigenous and renewable energy sources to meet growing energy needs. In 2016, Pakistan halted imported coal-based power plants as it bridged the demand-supply gap. Blending local coal with imports reduces coal imports. Thar coal generates 3,300 MWs of electricity. Alternative and Renewable Energies (AREs) has surpassed 6 percent of the fuel mix. Multiple hydel plants are initiated. Nuclear power capacity has reached 3,530 MWs, with plans for another plant at Chashma. Reliance on Fuel Oil for power production has significantly decreased.