The News on Sunday: How do you view the current energy crisis?
Tahir Basharat Cheema: It is the fourth time that Pakistan is facing such an energy crisis. The first one was in 1974-75 which was mitigated through the construction of Tarbela Dam producing 3600MW of electricity in 1978. The second one was in 1983; it was handled by the construction of Guddu power station. The third crisis occurred in the 1990s and was taken care of by Independent Power Producers adding 6,000 MW. A time came when Pakistan had a surplus 4,000 MW power and was thinking of exporting electricity to India. The fourth crisis took shape because of the ‘consumption-led growth strategy’ adopted during Pervez Musharraf-Shaukat Aziz eras. We lost all surplus power and started facing shortage in 2006.
We gave electricity to urban areas at the cost of rural parts. The problem was that when we had extra power, we did not think about making new power stations. The demand grew due to consumer-friendly policies and the growth rate went up to 14.7 per cent, which was up to 25 per cent in major urban areas.
Shaukat Aziz thought the private sector can take care of the shortage but it failed. Then, in the last PPP regime, they had to jumpstart projects and they, somehow, added 3400 MW in the total capacity.
Now, the present government is facing the challenge of shortage of electricity, new power houses, and making maximum recoveries through different ways to balance the budget. At the moment, all provinces and Azad Jammu and Kashmir are the biggest defaulters along with many government entities and departments. The situation of power sector is grim. There are no professionals or permanent heads of distribution companies. Tariff reduction is a big issue. The sector and the billing system are not disciplined.
TNS: Do you think the division of WAPDA into different entities was a good reform process during Musharraf regime?
TBC: Frankly, reform process has never been taken up earnestly. Some parts of the bureaucracy were pushing for reforms while a huge number was trying to pull the reforms back. The reform process simply proved a disaster. Now things are in bad shape.
TNS: Why is Pakistan lacking in hydel generation which is considered a cheap option as compared to thermal?
TBC: Hydel generation was cheap earlier because payments were made by the government out of its budget. If you construct a hydel project with commercial loans today, it would cost Rs14 per unit which leads to another issue.
The best way would be to allocate at least Rs100 billion each year for the energy sector and let the private sector support it. We have to recognise that power sector is a regulated sector and the regulatory authority can take care of all stakeholders’ interests, including consumers. At the moment, all cost is to be returned by consumers at the end. National budget must allocate special money for such projects.
TNS: New big power projects have not seen light of the day for years. Don’t you think this delay is adding to problems?
TBC: The major delay is because of finances. Take the example of Diamir Bhasha Dam, which was inaugurated in 2007 but nothing started actually. The Asian Development Bank announced support but later backed out. India is opposing it, asking the World Bank not to support it since it’s in the disputed area of Kashmir. Now we hear that the USAID and other investors are coming but I think it would be hard to do it because of the strong Indian lobby. The main reason of delays in different projects is lack of money. I suggest government should issue Bhasha Dam bonds to get money and give WAPDA all power to complete the projects.
TNS: One of the major concerns of people is expensive electricity. Why is it so expensive?
TBC: Electricity produced in Pakistan is very expensive. In 1978, of the total production, 80 per cent was hydel, 19 per cent through gas, and only one per cent was thermal. Gradually, the government started cutting the gas share of WAPDA and by 2000 the gas given to WAPDA for power stations was 738 mmcc, which today is only 300 mmcc. The major reliance is on thermal electricity.
Also, the power sector is not disciplined at all. People and government departments do not pay bills. Unless we start paying the bills, power sector cannot be operated. Further, when IMF urged us to balance the budget, subsidies were withdrawn from domestic consumers. Bills increased from 30 to 100 per cent.
Also, people in the ministry of water and power were not all very professional and when Nargis Sethi, a tough civil servant, pushed for recoveries and to meet line losses, including theft, the distribution companies started over-billing the consumers. Now, three audit firms are probing into that matter. There should be a national level campaign to stop theft and inculcate a bill paying culture.
TNS: How do you see the issue of demand and supply under the current circumstances and in future?
TBC: At present, the growth rate is 7.5 per cent. And if we continue with the same average by 2030 we need at least 100,000 MW power generation to meet all needs. At the moment, the available maximum generation of Pakistan is up to 18,000 MW, which was produced this year. To meet the challenge, the government must implement the National Power Plan of 2012, which is an updated version of 1994 NPP. That plan is revised through international level consultants and we should follow it. Also, until and unless the current demand is not controlled through conservation, consumers would continue to face bad times.
In a crisis like this, we never pay attention to the production side. We also need an energy efficiency policy. India, Sri Lanka, and many other countries have succeeded in this regard.