WEB DESK: What is the priority of the government? Is it building the road infrastructure or installing power plants? Within power sector who is the main executor – private sector or government?
Its all hotchpotch; both Federal and Punjab governments are working according to their own convenience and preference without having any set of rules and clear cut priorities.
Yet projects are coming in and all these would surely help unlock the economic potential; but the debate is on the efficient ways to deploy the limited pool of resources.
Private sector is disoriented with governments modus operandi. Its not clear that whether the latter is running a pro-privatization policy or not. A few steps envisaged are exactly opposite to the privatization theme. The objective on paper is that the public sector proved to be incompetent in running power projects and large corporations and to make them efficient the whole idea of privatization comes into play.
But why then is the private sector swayed away from coming into the RNLG based power plants? Why have all the three projects of RLNG based IPPs been kept in the public domain? One company is under the Punjab Government and two are under the Federal Government, incorporated with the mandate of having a power plant of 1000-1200 MW each in Punjab.
If the private players at home didn have muscle or will to produce these projects all by themselves, why not opt for a public-private partnership?
Business houses in Punjab are disgruntled over the government policies of sidelining them and having the whole pie to itself. Government should not be in the business of making money, let the private players to do what they are best at and rest is for government to regulate to make the market efficient. But that is not what is happening in case of RNLG power projects.
On the flip side, the government is planning to privatize KAPCO by disinvesting its share in it. These policies are poles apart and vary from project to project. That is absurd.
KAPCOs power purchase agreement will conclude in six years. Barring an amendment by the government, its sale now just won be able to fetch best price. Hence, the apparent plan is to either extend the PPA or make a new one for period beyond 2021.
Why do so? When the plans are to come up with new gas based power plants which have efficiency of 57 percent, there is no rationale to extend the tenure of existing low efficient (42%) plants. This exposes how unclear policymakers are.
Government is coming up with new efficient plants by itself and privatizing the old plants, less efficient ones. Why? The answer is simple; to grab some easy money today by disinvestment of KAPCO and pass on the buck of inefficiency to consumers beyond 2021. Isn it short-sightedness?
But the good thing is that Chinese are coming into investment of coal-based power projects. They may also come up with gas plants and have firm plans on nuclear, wind and solar projects.
The other area where private sector is reluctant because of lack of commercial viability is hydel. Government is working on Neelum-Jhehlum and other projects, and this will add much required energy and help improve water storage. The bottom line is that despite all jumbling up and poor policy framework, the projects are likely to come and if everything goes as planned Pakistan might be energy surplus by 2021.
SOURCE: BR Research