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June 21, 2021

National Electricity Policy 2021: Draft policy termed anti-hydropower

PESHAWAR: The Pakistan Tehreek-e-Insaf government in Khyber Pakhtunkhwa would have to provide answers to many uneasy questions if the new National Electricity Policy 2021 to be discussed today in the Council of Common Interests (CCI) meeting doesn’t take into consideration its concerns about tapping the huge hydropower potential of the province.

The draft policy is being termed as anti-hydropower by those familiar with the issue. It could harm the interests of KP, where the PTI retained power in the 2018 general election in a rare occurrence as the voters in the province aren’t known to give a second chance to the ruling party.

In the process, the proposed policy may give a new lease of life to the nationalist Awami National Party and Qaumi Watan Party as well as the other opposition parties, including Maulana Fazlur Rahman’s JUI-F, that have been criticizing the PTI government for failing to protect the rights of KP despite the fact that the party is also in power in the centre. Sources said the draft National Electricity Policy 2021 has deprived the provinces of any role in the power sector in violation of Article 157 (1) of the Constitution that made it mandatory for the federal government to consult the provincial governments before undertaking a hydropower project there. In the previous policy, the provincial governments were accepted as significant stakeholders in the power sector with the right to initiate projects keeping in view their priorities.

According to the sources, the federal government under the new policy would be able to unilaterally choose strategic projects and exempt them from the policy’s applicability as it wishes. It would also obtain the right to build storage projects in the provinces without consulting them.

The sources claimed KP despite its objections wasn’t consulted while formulating the policy of purchase of power in future in accordance with the Indicative Generation Capacity Expansion Plan (IGCEP), a list of projects identified by the federal government on the basis of 27 indicators. These indicators are mostly inclined towards least costs without taking into account the fact that the Constitution envisages certain weightage for hydro-generation and also mentions the payment of net hydel profits (NHP) as share of the province where the power station is located. The sources pointed out that KP would be hit hard in case the new policy for procuring electricity contingent upon IGCEP is implemented as a number of hydropower projects in the province weren’t included during a recent presentation to NEPRA for approval. Some of these projects are in advanced stage of completion after investment of billions of rupees.

Another worrisome clause in the draft policy for KP is inclusion of the cost of transmission lines as an integral part of generation. The sources said this would make the hydropower projects, which are capital intensive to start with but are economically and environmentally more viable in the long term compared to thermal, wind and solar, very expensive. The federal power purchasers would thus find an excuse not to purchase power from such projects as rivers and other sources of water capable of producing hydel-power aren’t generally close enough to the existing grid and need longer and costly transmission lines. KP has an edge in terms of hydropower generation, but it would be deprived of private and foreign investment coming its way as the proposed policy doesn’t provide any impetus to the hydel-power projects.

The CCI has been deliberating this policy and has referred the matter to a committee headed by Shaukat Tareen with the four chief ministers as its members. It has to conclude its meeting by this afternoon when the CCI has to meet to reconsider the draft National Electricity Policy 2021.

The sources pointed out that the draft policy would discourage innovative concepts, including wheeling and establishment of provincial grid companies. The KP government has already started wheeling to supply cheaper energy to industrial units to attract investment and generate jobs.

According to the sources, the Power Division consulted provincial secretaries only while formulating the draft policy even though KP would have preferred consultations at the level of chief minister as important questions involving political, economic and geo-strategic priorities of the province had to be discussed and resolved. The answers to these questions would also have an impact on the political fortunes of the PTI in its KP stronghold.

The sources said a more prudent approach would be to have further consultations between the federal government and the provinces to reach an amicable solution. The Power Division ought to sort out these issues by engaging with the stakeholders at the highest level before taking the matter to the CCI.