The issue of loadshedding is quite controversial and all kinds of advices and accusations are available. In all the proposals that are normally given, transparency of the type that is required is generally not included.
We will posit some important proposals in this respect as well. We will take up the issue of loadshedding first and discuss transparency later.
An obvious answer is that the available supply is less than the demand. But what is supply and what is demand? There is something called the installed capacity and there is another called de-rated capacity. Because plants get old and lose their original capacity to produce for a variety of reasons. And then there is actually utilised capacity. Actual (de-rated capacity) may not always be utilised properly. Due to poor maintenance and planning, even rerated capacity may not be utilised properly. Surprisingly, there may be other reasons not to produce what one can produce; for example, it is alleged and perhaps correctly that K-E (and even MoWP) does not run its furnace oil-based plants for financial reasons. Nepra has fined them on this, but to no effect.
K-E has its de-rated capacity of 2093MW and with purchase from local IPPs (350MW) and exports from Pepco system (650MW), the total supply capability adds up to 3093MW. People say there should be no loadshedding. K-E says there is no loadshedding in the paying regions where theft and receivables are under control. The fact is that there is loadshedding. K-E has a peculiar tariff system.
They have been given a constant price tariff with adjustments for inflation. In the constant price system, it is in their benefit not to run inefficient plants or the ones where fuel cost is more than what is provided in the constant price. Also, furnace oil is purchased on cash and gas perhaps can be bought on credit or adjusted with receivables. However, one wonders that with oil prices 50% lower, is F.O. issue still valid and instrumental in explaining the case? For a precise answer, one has to really audit the accounting data and do some scenario analysis. I am not sure if Nepra has ever appointed some clever and professional auditors and consultants to find out the truth.
However, even if K-E may be browbeaten into utilising its furnace oil capacity and thus reduce loadshedding, how about the Ministry of Water and Power? They are being accused of the same sin albeit perhaps for slightly different reason. The government says that the real dependable capacity is of around 18000 MW which they produce in summers and in winters hydropower is limited to 1000MW instead of 6000MW that is generated in summers and thus 12000MW is generated during winters which is the dependable capacity in that season.
The loadshedding in summers is 8000MW and in winters it is 5000MW. Demand, however, has been increasing by about 1000MW per year in the last few years making the demand-supply balance or lack of it even worse. Only 1000MW has been added to the system over the period 2013 plus. Sometimes early heat, makes the balance even worse as is the case these days in mid-April (2017).The problem with electricity is that it comes or goes in lumps. It cannot be done yearly. It takes about 3-5 years to install a power plant of 1000MW.
About ten or more power plants with a total of 10,000MW capacity are at various but advanced stages of development and this capacity can only come on line when plants are completed and commissioned in all respects. One part less and the power plant would not be on. In some cases, part of the plants can be commissioned in advance as has been done in Bhikki where gas turbines have been installed and commissioned while steam turbines would be commissioned with a gap of some six months. Similarly, Neelum-Jehlum Hydro may begin with one or two turbines.
Even if there are some problems in this package of 10,000MW whether in generation or in transmission or distribution, it can be reasonably hoped that the electricity crisis would be largely over; and may be difficulties would remain that are always there in life. Cheap electricity from LNG and coal should also help reduce cost of generation and thus the need of subsidies and the unpaid subsidies causing circular debt which allegedly causes downwards pressure on electricity generation.
In this table (in the middle of this article) we have provided salient and condensed data on Installed and de-rated capacity, annual generation of electricity and Capacity Utilisation Factor (CUF) of the three categories, namely: hydro (which is almost all in public sector), Gencos (which are in public sector and are thermal) and IPPs (which are mostly thermal and in private sector, except Chashma Nuclear which are government-run by PAEC).
This table has been consolidated and compiled out of the Power System Statistics (2015-16) released by NTDC as it does annually. Some power plants may have been left out for a variety of reasons. An installed capacity of some 23000MW with a de-rated capacity of 20358MW. Total generation is 95573 GWh. The most important column is of capacity utilisation. Average total CUF is 47.52% which is rather low, but at such an aggregated level may not serve the diagnostic purposes. Hydropower sector has a CUF of 53.71% which is normal for hydropower plants. We can also understand the low CUF of 38%, which could have been at 50% under better and more efficient management. Gencos have also suffered from the lack of availability of fuels.
However, what is not fathomable is the low CUF of IPPs which should have a high CUF around 70-80%. A 10,000MW of IPP installed capacity should give 7000-8000MW. Most IPPs are in good shape to be able to run and generate electricity at a high capacity utilisation rate. The normal mantra seems to be correct that there are financial reasons for lower electricity generation and capacity issue is exaggerated. Load shedding should have been much less had IPP not been under-utilised. Thus the general perception appears to be correct unless some revolutionary argument from MoWP indicates or prove otherwise.
In that case then, critics probably rightly argue that MoWP is not letting all the generating capacity being utilised and more costly oil fired plants are not utilised as much as it should. At 50 USD per barrel, it is highly unlikely that this would help improve finance and reduce circular debt. The cost of generation is higher than the allowed tariff, compelling GOP to pay subsidies which it promises but does not pay regularly and totally. Resultantly, IPPs do not make fuel payments and hence the term circular debt.
When the present government of PML (n) came to power in 2013, it did pay off the accumulated circular debt but more was created as the basic disease of higher cost of supply as compared to tariff is still there. Perhaps this may never go, as essentially the cost differential is almost equal to the theft and receivables. If both poor and the rich steal and manipulate political system, there may not be scope for improvement until the social conditions change.
But why shouldn’t a political government near the elections pay and worsen loadshedding? It is not understandable. Perhaps deeper answers are to be found. To find the real and deeper answers, one needs to have reliable data that is available to all and here comes the relevance of transparency.
We have NPCC (National Power Control Centre) that has all kind of relevant data .The first thing a clever secretary Water and Power does it that he orders NPCC not to share data even among government organizations. They never shared the NPCC data with Planning Commission despite efforts on the part of the latter and shared probably only concocted figures. The data should be available on websites to be used by all so that real reasons and culprits are identified. This is not a ‘data utopia’ that I am talking about. In most industrialized countries, this data is publicly available, sometimes free and sometimes on paid subscription.
Even India provides more data transparently than Pakistan does although only 10% of the Indian generating capacity is traded (trading makes it absolutely essential to make data available on line).People would keep groping for answers and would not get close to facts and actual situation. Even the incumbent government is susceptible to deception and even fraud. When politicians discover the inefficiencies and mis-statements, it is too late. They by the time have promoted the wrong guys and removing them late has no consequence. Bureaucrats have immunity and politicians are after each other’s neck.
The explanation of the Minister of Water and Power is also correct that due to seasonal misalignment of water melting and hot weather, the hydropower production is much less than the usual. The questions that need to be answered are: what amount of load shedding is due to mismanagement and inefficiency? what amount of load shedding could have been avoided with better efficiency and without alleged policy of controlling circular debt and subsidies and thus producing less? If the latter is true, I think there would be nothing more foolish than this.
I don’t think, they are that foolish. Some explanation is due from the relevant quarters. On transparency, I would urge the Prime Minister and the Minister W&P to order on-line publishing of NPCC data daily on a regular basis so that he is not fed with concocted figures compiled manually and credibility of government data and statements is improved for the benefit of all.-Business Recorder