Experts recommend liberalisation of energy market

Our Correspondent
October 06, 2022

LAHORE: Speakers at a consultative session organised at the premises of Punjab Public Private Partnership Authority supported the liberalisation of the energy market.PPPP Authority CEO Amjad Ali...

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LAHORE: Speakers at a consultative session organised at the premises of Punjab Public Private Partnership (PPPP) Authority supported the liberalisation of the energy market.

PPPP Authority CEO Amjad Ali Awan chaired the session involving participants from the National Electric Power Regulatory Authority (NEPRA), Lahore Electric Supply Company (LESCO), Punjab Power Development Board (PPDB), and Water and Sanitation Agency (WASA). Quaid-e-Azam Thermal Power Plant, Punjab Power Development Board (PPDP) and other private sector developers and transaction advisors including from Earnest & Young also participated.

The event was organised to look at carbon neutral sources of energy ie solar, biomass etc to provide to government entities, so the load on expensive grid-based power could be shifted partially or wholly through PPP modalities.

Awan briefed that enactment of Punjab PPP Act 2019 has been the key milestone, whereas a reasonable footprint of PPP projects has already been attained. He said that Punjab PPP Authority, in addition to executing the projects in the pipeline, intends to approach different sectors of the economy through its sector diversification strategy involving, water, transport, energy, housing, and tourism.

Presently, a concession agreement for PPP projects worth Rs50 billion has already been executed, while a broad-based pipeline of Rs200 billion has been earmarked, involving PPP projects in Punjab.

The Punjab PPP Act provides a liberal pathway that allow the private sector to propose PPP projects in the renewable energy sectors for which the authority was jointly working out with all stakeholders to structure viable PPP projects, while maintaining transparency as well as achieving desired value for money (VFM).

Regarding liberalisation of the electricity market, he said there was ample appetite being felt by the market players towards deregulation of the electricity sector involving multiple buyers and sellers of electricity.

Appreciating NEPRA measures for its ongoing regulatory reform being introduced in the country in the form of Competitive Trading Bilateral Contract Market (CTBCM), he further opined that the next steps should be to allow business to business (B to B) and business to government (B to G) arrangements in the market to take the market re-structuring at retail levels.

He explained that the later arrangement better suits the PPP modality, by which the load requirement of government entities like WASA with the current requirement of 90MW of power could be partially shifted to cheaper and green energy resources like solar photovoltaic.

This was the way PPP modalities can be employed to procure cheap green resources of power to government entities and industries.

He said these strategies could curtail circular debt and reduce the reliance on imported fuel. This could also pave the way towards building an indigenous energy economy that could slash electricity price and shrink the carbon footprint.

Sharing his proposal under the PPP arrangement, Awan said, “Although B2G option can be utilised for the provision of energy supply to government entities by involving private sector, the wheeling of electricity would be a critical factor.” This required shifting the focus for the anticipated agreeable form of “wheeling regulations” which were previously issued by NEPRA.

To meet the partial requirement of meeting electricity demand of WASA on the basis of dedicated retail sale would be the best pilot case for the procurement of cheap solar energy through the PPP mode.

NEPRA representative Gul Hasan Bhutto appreciated the management of Punjab PPP Authority for its efforts in the process of market liberalisation. He further viewed that market liberalisation through PPPs was an encouraging initiative, which needed to be reviewed by all the stakeholders in the light of grid code and prevalent market re-structuring initiatives.

He said that eventually the future was retail marketing and NEPRA was working on the frameworks of institutional, regulatory and policy side, which would support private sector players in provision of energy.

The participants raised key questions regarding new policy initiatives to be introduced by NEPRA for the private sector developers.

Awan said similar sessions would to maintain the momentum, which might involve fast track efforts towards refining wheeling regulations of NEPRA and seeking broad based consensus on PPP based electricity retail systems as envisaged during the consultative session.

Giving his vote of thanks, he showed his unflinching resolve and support towards market liberalisation measures, which might make the best use of abundantly available natural renewable energy resources with added cost advantage that might achieve decarbonising of Pakistan’s energy economy as well as to ultimate elimination of the energy crisis.

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