Jan 21 - 27, 2008

At present some parts of the country are enduring the worst load shedding of electricity. The industrial sector faces double-edged sword, long hours of electricity outage and virtually no supply of gas. It is feared that continuation of electricity and gas load shedding would not allow the country to meet the GDP and export targets. It is also feared that some quarters may try to exploit the situation by initiating anti-government demonstrations and creating law and order situation. Disrupting normal life and violent clashes with the law enforcing personnel cannot be ruled out during the election campaign.

The state owned utility companies are trying their best to cover up their negligence and inefficiency by attributing the current crisis to disruption in railway system in the aftermath of assassination of Benazir Bhutto. However, their rationalization is not acceptable because of the ongoing rift between the utility companies and oil and gas marketing companies since June 2007. State owned power generation companies were failing in making timely and full payment for the oil and gas purchased. They were also unable to settle electricity purchase bills of the independent power producers (IPPs). Despite being fully aware of the deteriorating situation and the magnitude of possible fall out they acted like ostrich.

However, state owned power generation companies cannot be held responsible alone for the omni present electricity crisis in the country. It is true that corruption and mismanagement is rampant in the state owned utilities but utopian government policies since eighties have completely disturbed the power generation, transmission and distribution system in the country. On top of this adhocism and vested interest of certain segments of society has plunged the system to a level where recovery seems impossible without taking some harsh decisions.

To begin with the country has monstrous institutions like WAPDA. An attempt was made in the past to segregate power and water operations of WAPDA. Power wing was further fragmented into corporatized entities responsible for generation, transmission and distribution and a time line was also decided for the privatization of these entities.

WAPDA and KESC were stopped from establishing additional power generation facilities and establishment of IPPs was allowed. The new policy was in response to the changed stance of international lenders, who refused to extend more funds to WAPDA due to its deteriorating financial health. The Power Policy virtually put the cart before the horse.

The reason for deteriorating financial health of WAPDA and KESC was not the inefficient power generation. The real causes were mismanagement, corruption and power theft. The persistent hike in electricity tariff, for increasing revenue, did not help because it provided incentive for theft to the consumers and corruption among the employees. Theft of electricity is not possible without the connivance of staff of electricity companies.

The prevailing situation is not new for the consumers as they have been facing electricity outage/load shedding for almost two decades. However, the frequency and duration of such outages have increased with the passage of time. Therefore, it is necessary to first find the reasons for load shedding and then propose measures to overcome the menace.

It may sound disappointing but the fact is that policy planners do not comprehend the actual supply and demand situation of electricity in the country. The numbers about installed capacity are overstated and numbers about electricity units consumed are grossly understated. Policy planners refer to installed capacity, which is of no consequence. They should talk about dependable capacity only and also keep in mind the actual data about generation. While estimating the current demand and forecasting future consumption they should look at number of units dispatched rather than number of units billed.

In Pakistan electricity is generated at the thermal and hydel power plants. In case of thermal power plants every unit has a designed capacity but for all practical purposes professionals refer to its dependable capacity, which is 10 to 15 percent lower compared to the designed capacity. Capacity reduces further with the ageing of the plant and the standard of maintenance.

In case of hydel power plants dependable capacity is calculated on the basis of water availability, which varies with the change of weather, relatively high in summer and exceptionally low in winter. While calculating the dependable capacity of hydel power plants the professional also keep in mind production data for last five years to arrive at a realistic figure.

Over the years the high ups of the power generation companies and Ministry of Water and Power have been misleading the nation by saying, "The country has surplus power generation capacity." They never admit what is the dependable capacity. While talking about consumption they refer to number of units billed and always forget to add back the number of units pilfered. Theft is un-account for consumption yielding no revenue for the company but brings a lot of extra income to the employees of the company.

Another point worth talking is that electricity companies claim that they are trying to overcome the shortfall through "load management" which is nothing but announced load shedding for specified number of hours. These companies also drag the outage by attributing it to "tripping of national grid". All these jargons are used to mislead the consumers rather than accepting their failure in meeting the demand. The level and intensity of load shedding depend on the gap between demand and supply during off-peak and peak hours.

However, one thing should be made very clear among the consumers and representatives of public that there was, there is and there will be no surplus of electricity in the country. In order to save their skin policy planners do try to create impression about the surplus, which is completely misleading.

One of the recent examples of trying to create an illusion is the campaign about the measures being taken by the government. It has been informed that an additional 2,376 MW power will be generated with the start of 12 thermal power plants in private sector by 2010. Is it not interesting that the whole country is going misery of load shedding and the bureaucracy is telling that the additional capacity will be available by the 2010? Ironically, they fail to appreciate that by the time additional capacity comes on line demand would have further increased.

Some of the major thermal power projects to be completed during next couple of years included 235MW Muridke power project, 225MW Orient Thermal power plant, 225MW Altas power and 225MW Halmore Power project. Similarly, 516MW power will also be generated during two years with start of six hydel power plants in private and pubic sector with major 130MW Duber Khwar and 121MW Allai Khwar.

Ministry of Water and Power has constituted two committees on the directives of energy task force to take short term operational measures and medium to long term development plans to redress the power crises resulting from demand and supply gap. All the concerned stakeholders including IRSA, oil and gas companies, PEPCO, NTDC, and PPIB are the members of these two committees to look into specific operational and planning issues.

A crises management plan was launched to manage the situation arising out of such supply gap with major components including prudent load management, energy conservation, and demand reduction with no major impact on citizens' convenience. According to them, due to steps being taken the power deficit will reduce and further improvements are likely regarding power generation in shortest time in the country.


The policy planners must understand that achieving above 7% GDP growth target will not be possible at all with the current level of load shedding. The issue cannot be resolved through load management and additional generation capacity has to be brought online at the earliest. The much talked about additional capacity is not enough to meet the current shortfall what to talk about future demand.

Historically, electricity tariff has been comparatively higher in Pakistan due to a number of factors ranging from inefficient power generation to rampant electricity tariff. Gradual shift from hydel to thermal power generation has also results in higher cost of generation. The successive power policies of the government have not yielded the desired results in enhancing power generation in the country and reducing cost of generation. Heavy dependence on imported furnace oil has to be substituted with low cost indigenous fuel like coal.

Interestingly, utility companies have been declining new connections despite making tall claims about surplus power generation capacity. However, employees have always been prompt in providing "official Kunda" allowing the consumer to use as much electricity as desired by just paying a minimum amount.

Higher tariff also provides an incentive for power pilferage and all sorts of consumers shift part of the load to Kunda and enjoy the life. It has been on record that during worst load shedding Kunda users continue to get the supply. Therefore, a clear cut policy has to be developed to regarding new connections, maximum permissible load and time frame.

Government has to expedite development of alternate energy sources. However, the focus should always be on hydel and nuclear energy, enjoying the lowest cost of generation.

Pakistan enjoys millions of tones of coal but this potential has not been exploited as yet. All the arguments put against use of coal for power generation are based on "selective perception". If coal can be used in Germany why can't it be used in Pakistan? The prevailing situation is because of people having vested interest in promoting furnace oil based power plants.

The policy planners must act fast because each passing day is adding to the miseries of consumers. Load shedding is affecting industrial output and exports and also forcing the entrepreneurs to defer expansion plans.

Entrepreneurs, in their own interest, are advised to explore "cogeneration" option. Those who have not explored this option must learn from the experience of those who are benefiting from this.

Regretfully, policy planners have been failing in exploiting the advantage of "captive power plants" of sugar mills. It is true that this capacity is not available during the crushing season but not utilizing it for the remaining nine-months is waste of resource.