KARACHI: Pakistan's new power policy is going to reduce the country's reliance on fossil fuel imports in what officials say would help introduce a sustainable and competitive electricity market.
The Cabinet Committee on Energy (CCOE) on Thursday endorsed and recommended the National Electricity Plan (NEP) 2021 and Indicative Generation Capacity Expansion Plan (IGCEP) to achieve access to affordable, secure and sustainable energy.
The government drew criticism last year that its long-term plans were putting the country’s power system at risk of being locked into expensive long-term overcapacity.
A September study by the Institute of Energy Economics and Financial Analysis (IEEFA), an American think tank, had indicated that Pakistan’s long-term energy plan risks the country being locked into overcapacity and expensive power generation and indigenization would leave behind imported coal and Liquified Natural Gas (LNG) power plants of 35,000 MW capacity as stranded assets.
Planning Minister and CCOE chairman Asad Umar said after Thursday's meeting that the new plan will "provide the basis for a sustainable competitive electricity market in the country."
The plan focuses on a gradual shift to local energy resources.
“The generation mix for the sector shall gradually reduce reliance on the imported fuels and shall move towards optimal utilization of local resources such as coal, hydro, renewable sources, local gas and nuclear," the NEP draft seen by Arab News read. While the plans are still pending review by the Law Division, CCOE has revised its last year version of IGCEP and reduced its tenure from 27 to 10 years.
The new IGCEP projects demand of 43,820 MW for 2030 for which a capacity of 76,391 MW will be provided. In the previous version for 2047, the demand was projected at 103,065 MW with a capacity of 168,425 MW. Some experts, however, believe the major problem that makes Pakistan's energy market unsustainable is the fact that its electricity is expensive — which still is not addressed in the new plan.
"The government should immediately replace old power plants that are producing around 8,000 MW expensive electricity with efficient plants such as solar, hydro or wind power plants," international energy consultant Khalid Faizi told Arab News.
"The power plants are producing electricity that cost around Rs 25-30 per unit," he said.
Pakistan's per capita electricity consumption is around 600-700 kilowatts a year. In Malaysia, it is 4,000 kilowatts, while in Turkey 3,000 kilowatts.
"The World Bank has reported that 30 percent of Pakistan’s population still lacks electricity and if we claim that we have surplus capacity than why we are not facilitating those people," Faizi said.
"Government needs to swallow a bitter pill by reducing the cost of electricity to encourage its consumption that will reduce the fix capital cost," he said. "Electricity is a product that needs to be purchased like any other product."