Never before in 72 years of history, did Pakistan had this golden opportunity to have instantly available reliable (IVR) power capacity and units in MW and MWhr to attract investments. It was always in a situation of load shedding with not enough power to supply to existing and new connections. The investors and sponsors of industrialization had to wait for years to get power connection making projects unviable. The investors would miss the market opportunity and would either give up or leave the country for those countries, which had immediate power connections available.
Pakistan needs to sustain this IVR power, otherwise it would lose the initiative in place to sustain the economy, accelerate GDP and create job opportunities in millions.
Present, snap shot of power supply / demand as of June-2018 is as follows:
Installed Capacity = 33,554 MW
Generation (2017-18) = 131,275 GWhr
Auxiliary Consumption = 3,793 GWhr (3%)
Imports (2017-18) = 556 Gwhr
Consumption Annual = 106,927 GWhr
Losses (2017-18) = 131,275-106,927
= 24,350 GWhr
= (Rs 365,220,000,000/-)
= A great opportunity awaiting to be utilized.
Capacity Factor = 45%, a great blessing to capitalize upon. An extra-ordinary opportunity for fast track industrialization …… had it been around 77% Pakistan would have been constrained in given power connections readily.
There exists one great opportunity in un-utilized Capacity Factor, which can be used for boosting exports for accelerated industrialization on immediate basis by the present Government. The Ministry of Industries, Commerce, Textile and alike can showcase this great advantage to national and international investors, who will swarm in due to available MWs/Connections. Although transmission/distribution is a bottleneck but it can be resolved in less than two years. Pakistan has capacity for designing, manufacturing and EPC of transmission lines. Pak Steel Mills only can churn out braces of any about of towers.
Staggering annual loss of Rs 345 Billion needs immediate attention of the Government. Even 40% of reduction will reduce tariff, circular debt and give more electricity to the demanding consumers. Saving 40% of 24,350 Gwhr, would mean 811,600,000 Kwh per month could be made available at an incremental cost of say Rs 2/Unit to the industrial sector. At an average of 200,000 Kwhr per month for industrial use, some 4,000 Units can make tremendous export surge.
A blessing, the utilization of Low Capacity factor for a massive industrial Surge awaits the present government. Capacity factor differential of 77-45%=32% opportunity or 7,921,120,067 Kwhr per month could be made available to 40,000 industrial concerns for a major Surge in Exports and industrialization. In case, the Government accepts Incremental Tariff regime than a tremendous Tsunami of industrialization will be witnessed, setting stage for frog leap into prosperity.
On Short term (2 years) basis, Incremental cost of providing connections is much lower than other countries. Other countries who have optimal power generation, transmission lines, Load Curve, consumption and efficiency have to invest heavily with considerable gestation period, while Pakistan has to spend much less money and time to fix its sub-optimal system. Example, construction of a building for rental is time consuming and expensive compared to painting it only. Pakistan is well placed to offer incremental tariff to industries, existing, shut down and new to industrialize Pakistan on fast track basis.
The policies governing the power sector needs to be resolved one way or the other asap. Pakistan power market is still nascent, therefore it needs support therefore, no reason to change the basics of present Power Policies, except to make these compliance based; away from nauseating approval basis. At this juncture of Pakistan power and economy, both still nascent Upfront Tariff regime is the most efficient way. By law of average, some project will have 18% IRR some 16%; the average will be 17%. Getting into nitty gritty nuts and bolts before approvals needs to be avoided for more efficient processes. It’s not the time to work on optimal generation mix based on long exercises but let the investors pour in money and Megawatts into any type of generation technology. The Government needs to only give an Upfront Tariff, and see how the market forces accelerate capacity (MW) growth. Pakistan a mere 33,000 MW system, is going through massive brain storming, analysis, discussion, think tanks – wasting precious time of the nation and its future. I have witnessed systems of 80,000 MW being decided much quicker. Too much analysis causes paralysis; Pakistan needs to move on without stomach-turning analysis and thus delays. Pakistan has to do a lot of catch up in kwh per capita, therefore, debating on each and every dot and dash would not get the economy to its deserved place. The Planning Commission needs to take charge of Supply Planning in perspective terms not decimal counting.
Pakistan needs to target Loss of Load Probability (LOLP) of 1 hour in ten years by 2030 and needs to have spinning reserves of atleast 15% and IVR about 10%; these ingredients will cause swarming of investors into Pakistan. By 2030, Pakistan should have atleast 275,000 MW installed capacity to be a prosperous country.