Business Recorder (BR) Research
We don’t see any major improvement in the country’s power sector, do we? Well, if you had any doubts then read NEPRA’s recently released State of Industry Report 2014. The essence of that report is that there has been zero noteworthy reformist change in the power sector during the last fiscal year, and that the power sector continued to be inundated by its parasitic issues.
The power regulator has reflected upon the key happenings in the power sector over the year 2013-14, according to which the key issues like liquidity constraints, transmission and distribution losses, and recovery ratios did not improve over last year. Circular debt, which was temporarily wiped off when the government took office, has resurfaced as a bigger challenge. Another bad news for consumers is that load shedding will persist till 2018-19.
On the power generation side, the year saw installed capacity rise 2.3 percent to 550 MW whereas power production increased by 6.9 percent to 10,996 GWh, majority of which came from thermal power plants running on expensive furnace oil. BR Research has time and again raised red flags over the government’s lopsided policy of focusing on capacity expansion.
On the electricity transmission and distribution side, no improvement was noted. T&D losses in DISCOs remained over 18 percent, while recoveries remained below target at 84 percent in FY14. Also, the regulator has critiqued the National Transmission Dispatch Company for not taking concerted steps to mend and upgrade its systems for incorporating new power projects.
The report estimated 3.7 percent of GDP as the economic cost of load shedding in the country. The regulator has warned there will be no improvement in load shedding between 2014-15 and 2016-17. Not that NEPRA is unaware of the shelving of most of the coal-fired power projects; key recommendations made by the power regulator also include the fast-track completion of these plants.
Other pieces of advice include a thorough analysis of all options before setting up LNG plants, gas prioritization to power sector, harnessing the renewable energy potential, instilling competition through wheeling.
This article was originally published by Business Recorder (BR) Research on March 04, 2015.
