Draft National Electricity Policy 2020: Full cost of service not to be recovered from consumers

ISLAMABAD: Secretary Power Division Irfan Ali has dispelled the impression that the full cost of service would be recovered from consumers under the proposed National Electricity Policy 2020 as a portion of the subsidy will be available for consumers. More importantly, it is yet to be finalised as its preliminary draft is in circulation for input from the stakeholders in general and the provinces in particular.

Many things will be omitted, changed and refined before the final policy takes shape, he said. "However, the Power Division wants to deduct at source from NFC Award the reconciled dues owed by provinces as the delay in payments continues to be a headache for the federal government. But this also requires a consensus from the provincial players. So there is a long way to finalize the draft of National Electricity Policy 2020."

While talking to The News, Irfan Ali, Secretary Power Division said that the government will emphasize in the National Electricity Policy 2020 to minimize or abandon the reliance of electricity generation on imported fuel and move towards optimal utilization of local resources such as coal, water, renewables, local gas, and nuclear with the prime objective to make electricity sustainable and affordable for the end consumers.

On the proposal of empowering NEPRA to impose additional surcharges, he said that it was not finalized as yet. He said the National Electricity Policy 2020 will revolve around six guiding principles, including efficiency, transparency, competition, financial viability, indigenization (Research and Development) and environmental stability.

The government will focus on more efficiency gains by gradually improving the efficiency in the generation fleet, optimum utilization of the fuel base, reduction in Transmission and Distribution (T&D) losses, and improvement in collections and demand-side management, conservation, etc. Transparency will be the milestone of the policy to enhance consumer confidence, and as a result, improve the liquidity of the sector.

The transparency will be ensured through a predictable policy framework, uniform application of the regulatory framework, elimination of institutional conflict of interest, automation of processes and adopting best practices for the dissemination of authentic and timely information to all the stakeholders.

Talking of the competition, he said enhancement of competition in the sector will provide stepping stones for transition into a competitive wholesale market. And to ensure the sustainable supply of electricity, he said investment in the power sector will be encouraged on the least-cost basis under a competitive model in the underdeveloped areas like Balochistan and Gilgit-Baltistan. The investment in the power sector will be encouraged on the government to government (G-to G mode) basis under the cost-plus tariff mechanism.

"This we would ensure investment in Balochistan and Giligt-Baltistan, as most prefer to invest in competitive mode in Punjab, Sindh and some areas of the KPK. Since Pakistan wants investment in underdeveloped federating units, so the G-to G mode of investment will be encouraged there. Saudi Arabia and Kuwait want to invest in the renewable sector in Balochistan under the G-to G mode."