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August 9, 2018

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Pressing energy needs pose biggest challenge for next govt

LAHORE: The new government is going to face the daunting challenge of efficiently meeting the energy needs of the country, as any gains or shortcoming on this front will have direct impact on the economy as well as popular politics.

Several stakeholders have said that the upcoming government should come up with a meticulous plan for addressing issues related to energy availability and affordability.

General Electric Pakistan President and CEO Sarim Sheikh said, “Meeting the power needs of a population of over 200 million people is no easy task, and the ultimate goal for the new government should not only be to bridge the gap between supply and demand, but also to improve sustainability and competitiveness.”

It would be critical to look at diversifying the fuel mix to include Liquefied Natural Gas (LNG), coal, nuclear, wind, solar, hydro and other resources, and to improve efficiency across the energy industry, he said.

As of today, the immediate challenge the government faces was to address the liquidity in the sector and issue of circular debt. Reportedly, it has touched levels not seen before, and was driving poor economic decisions, he added.

Talking about chronic issues of the energy sector, Sheikh said, “The liquidity crisis is driven by growing distribution losses, receivables and non-payment.” While, addressing some of these issues was time consuming, complex and sometimes political; steps should be taken to ensure that the government uses a consistent, fair, and non-discriminatory policy to turn the tide and bring these leakages into control, he stressed.

“The second biggest issue is the stability of the electricity grid and transmission network whose evidence we have seen in the recent breakdowns,” he said, adding this has been compounded by significant investments made in the last few years to add new generation.

Referring to obsolete power transmission and distribution network, GE Pakistan CEO said the present national grid was built decades ago and was designed in an era where electricity was transmitted from large, centralised power plants to demand centres. “Today, the country has an inflow of power from various sources and the grid needs to catch-up to ensure it can manage a more diverse and distributed supply,” he added.

The network in both power distribution companies (Discos) and national transmission might be already overloaded and somewhat outdated. This would require new investment in not only expanding capacity but also better IT infrastructure to make it more responsive to demand and supply, he explained.

Thirdly, Sarim Sheikh said, an integrated energy plan would be required to make the choices of where to invest and what to prioritise. For example, one can consider both for grid stability reasons and cost effectiveness up-gradation of existing generation assets to deliver more megawatts at a lower cost and investment.

Lastly, to manage the balance of payments, it was necessary to rely less on imported and less efficient energy, while promoting use of indigenous resources (wind solar, hydro and coal). Here renewable energy played a significant role, which has remained under-emphasised in recent years. “Pakistan is well placed to tap into this global trend and set aggressive targets for adoption of renewables for a more sustainable future,” Sheikh said.

Belal Jabbar, a former central office bearer of LPG Association of Pakistan (LPGAP) and CEO Noor LPG said Pakistan is primarily an energy deficient country because of multiple reasons.

He underlined the need to diversify energy mix to ensure smooth and affordable supplies to all.

“I believe exploration and production of Sindh coal will have a significant impact on the energy mix though it will take time.” At the same time, he maintained, as the world is moving towards cleaner energy including LNG, Pakistan should further expand scope of this sector.

“LNG is attracting the majors such as Vitol, Gunvor and Exxon. Addition of new terminals will certainly improve energy security- though at a higher price,” Jabbar observed.

Talking about long-term steps, Jabbar said that the cheapest option was hydropower, but that was also the most time consuming. However, even if implemented today, one could reap the benefits for years to come.

Dr Fiaz Ahmad Chaudhry, former managing director of the National Transmission Despatch Company (NTDC), said one of the biggest challenges was to increase the capacity of transmission and distribution network in the shortest possible time.

NTDC and DISCOs would face challenges, following PPRA rules, and having weak teams to upgrade transmission and distributions networks and systems in eight to 10 years to incorporate 20,000MW to 25,000MW additional generation capacity, he said.

Dr Chaudhry reminded that the transmission and distribution system was developed over the last 60 years to incorporate about 20,000MW generation. Now generation has more than doubled from 20,000MW, with 10,000MW added recently, and 25,000MW under various stages of development and implementation.

“We are going to produce about 55,000MW in less than 10 years because 30 to 40 different IPP organisations are developing it and making it possible,” he said.

The former managing director said the NTDC worked with an old mindset, deteriorated skills, and access to unsophisticated existing contractors, who have been asked to do 60 years worth of work in 10 odd years.

“Therefore, we should expect problems and challenges for these public sector organisations in implementing huge volume of T&D work for which they are not fully ready and also not very well equipped,” Dr Chaudhry said. “We must appoint leaders of organisations on merit and let the leadership build capacity and capability in the respective organisations to face challenges of the T&D sector.”

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