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Role of Nepra in making strong Pakistan’s power sector

Any state with intention to boost its economy and to enhance the standards of living must need to secure a robust energy supply. In this fast moving technology world, make availability of electricity is very first need and in this regard Pakistan government is doing its best to meet the supply and gap demand of energy though the sufferings continue but there are number of projects in the offing that will be the sigh of relief for the citizen of our country for the next coming years.

The experts in the International Energy Agency expect electricity demand in Pakistan at greater than 49,000MW by 2025. The present Government of Pakistan has set goals under Vision 2025 to rise electricity from 67 percent of the population to greater than 90 percent and to decline average cost per unit by over 25 percent by enhancing the generation mix.

Some local industry experts also revealed that Pakistan’s energy generation remains 15 percent short of the total demand in this year, but the condition is predicted to reverse after 3 years as Pakistan’s planned energy generation capacity will surpass the predicted demand almost 10 percent. But unluckily the lack of a transparent regulatory regime led foreign financiers to secure their investment by long-term contracts in the country.

In Pakistan, National Electric Power Regulatory Authority (NEPRA) has been organized to introduce transparent and judicious economic regulation, based on sound commercial rules, to the energy sector of the country.

The authority reflects Pakistan’s resolve to enter the new era as a nation committed to free enterprise and to meet its social objectives. The management has been performing many main duties such as; issue licenses for generation, T&D of electric power; organize and enforce standards to ensure quality and safety of operation and supply of electric power to consumers; approve investment and power acquisition programs of the utility firms; and determine tariffs for generation, T&D of electric power.

The Government of Pakistan mentioned in a recent report that during July-March FY 2017, NEPRA granted licenses for generation, T&D of electric power for solar, coal, LNG, small Hydropower and Bagasse based energy projects. Total three firms such as Dating Pakistan Karachi Power Generation (Private) Limited (imported coal), Thal Nova Power Thar (Private) Limited (local coal) and Thar Energy Limited (local coal) unconditionally agreed the upfront coal tariff and the decisions in the matter were issued on August 11, 2016, October 18, 2016 and October 18, 2016 respectively. Total two firms i.e. Lucky Electric Power Company and Siddiqsons Energy have shifted from imported coal to local coal. Decisions in the matter were issued on October 20, 2016 and December 1, 2016 respectively. Tariffs were also issued on August 9, 2016 to National Power Parks Management Company for its 2 LNG projects placed at Balloki and Haveli Bahadur Shah of 1,223MW and 1,230MW respectively.

CIRCULAR DEBT

Since 2008, Pakistan’s energy sector has been facing fluctuations in circular debt issue. Due to non-timely payments of debt-burdened power utilities to the nation’s oil suppliers, the utilities cannot meet their international payment commitments, which ultimately result in a credit crunch and supply disruptions. The customers of power producers including government offices and state-owned companies are giving them hard time in terms of electricity theft, payment delays and defaults. In addition to these, high downstream subsidies prevent them from recovering the costs of fuel purchases, power generation and distribution. Presently the industry experts have calculated that the circular debt amount is almost Rs 500 billion, or around $4.8 billion.

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