July 13 - 19, 2009

Whenever gap in demand and supply of electric energy widens in the country, government of Pakistan seeks help of independent power plants or rental power plants to fill the gap, though the government has realized the high cost of power generation through rental power plants. So far, the government has not asked big consumers of electricity to initiate self-help projects of power generation. These big consumers are industries, which are also the main source of revenue for power companies.

While the government is taking contribution of independent power plants in national energy mix, permission of electricity generation above 50 mega watt comes under the purview of the federal government. An investor who plans to invest in power project in any province has to take permission from the federal government prior to set up plant of beyond that capacity. Need is to change the power policy and transference of authority to allow power plant beyond 50 MW to provincial level, urges Engr. M.A Jabbar, Chairman SITE Association of Industry. According to Policy for Power Generation 2002, federal government holds discretion to provide window support to projects of above 50 MW, and provinces can only authorize projects below 50 MW. Therefore, provinces are authorized to allow power projects of certain capacity. This is a sheer contravention of the constitution of Pakistan, according to Chairman Site Association, which is state controlled industrial area.

Since rental power plants provide a short term remedial to meet the power crisis government prefers to compromise on high tariffs of private sector electricity generation. Although, over 40 percent electricity in the country is generated by IPPs and captive power plants national-level projects often are delayed because of involvement of plethora of stakes and interventionists' politics. Government can shed its over-centralized rule over power production and distribution by enhancing practical participation of industries in power generation.

Is production of electricity by the industry and for the industry costly? Cost of operation of IPPs is high perhaps because of generation of electricity through furnace oil and on small-scale. "There is no legal restriction on a company regarding power generation," observed a veteran industrialist Majyd Aziz. Generation of electricity privately incurs relatively low cost to power consumers when compared to high costs of unannounced electricity load shedding and limited power supply of nowadays, which are adversely jeopardizing the cycle of production in industries. But, if industries invest to improve power sector, water supply, and other utilities, what is the job of the government, he raised the question. "According to my own calculation, one hour load shedding causes Rs2 billion loss to national GDP," he revealed while talking to this scribe. However, investment in power sector would be unproductive as the same amount can be spent for instance on expanding industrial operation, said he.

Some large-scale industries can become pilot energy outlets. Sugar industry and cement industries, which undertake earth-shattering energy-producing operations, can meet its energy needs of vertical and horizontal lines and of surrounding companies. Baggese-based power plants in sugar company and coal-combustion process in cement company could churn out sufficient power for industries. "In 1991, I introduced foreign investors to the potential in industries of power production through industrial processes," Majyd said adding the follow-up was weak.

"Private sector and captive power plants are meeting significant national energy needs, but trade areas are not producing energy in unification right now. There is a possibility, however," said Engr. Jabbar when asked about possibility of self-reliance in power generation of designated trade areas in Karachi. Let me tell you frankly, he punctuated, such projects are not manageable by companies. "When government of Sindh can not handle such projects, how come private sector can with having other essential primary jobs?" Come along with power generation other issues that need to be addressed. For example, tariffs regulation will be a challenge. Even though he says, private sector participation should be enhanced. Private sector can lend helping hand to the government in reducing shortfall and it has been doing so in many other instances, said Majyd Aziz while referring to Sialkot Airport that was built completely on private investment. However, Generation and distribution of electricity is not manageable, he said.

Amid power crisis, standby generators are performing beyond its primary jobs of emergency now, as their working hours expand to over 4 to 5 hours a day. Maybe, industries in some part of the country are getting priority of power companies. At national level, there is considerable chasm in power demand and supply. This gap can be filled by meeting demands both by commissioning more power plants and by sharing responsibility of power production and generation with private sector. Latter option seems to be viable if government relaxes its legal bindings on production limits as well as transfers subjects on concurrent list to the province.