In a previous article, this writer had noted that the global energy market was in flux and the landscape was changing dramatically. It was also pointed out that these were not mere aberrations or cyclic adjustments. A fundamental transformation was underway that posed vexing challenges to developed and developing countries alike in their quest to secure economic, affordable, and sustainable energy supplies for their economies and people (Pakistan & Gulf Economist, 03 June 2019). If the Covid-19 pandemic and Russia-Ukraine conflict and the disruptions in energy supplies and price shocks in their aftermath were not enough to make the turbulent…
Author: Dr. Shahid Rahim
“The true voyage of discovery lies not in seeking new landscapes, but in having new eyes.” (Marcel Proust) Our power sector is in dire straits already. Decades of ill-conceived policies, political expediencies, mismanagement, and vested interests have brought this vital sector of the economy to the brink. Among all the evils that plague our country, the power sector circular-debt, clearly stands out. It has crossed PKR 2.54 trillion already and is defying our government’s every effort to tame it. To save it from the financial ruin, our government will need to correct the fundamentals of this sector using solutions that…
Electricity rates in Pakistan were raised recently by a hefty Rs. 4.96 per unit by the government to meet an IMF condition for securing its latest bailout package. While consumers were struggling to swallow this bitter pill for the sake of saving our country from an impending financial default, the media is again abuzz with the news of another hike by Rs. 2.31 per unit in the name of fuel price adjustment. These frequent and heartless rate hikes make it evident that our government does not have any new or viable solution to deal with the power sector issues other…
Electric power supply and delivery system in many ways is like the human cardiovascular system. Proper functioning of each is vital for the health and vitality of its respective system. When in good health, we are not even conscious of our cardiovascular system and notice it only when it starts to malfunction. Many of us are shocked when our test reports reveal how badly we have been ignoring our health. The recovery invariably involves regular medication, in severe cases a major surgery, and radical changes in our life routines. Secure, reliable, affordable, and sustainable power supplies are to modern society…
Energy policies are important instruments that governments use to guide and influence the participation and conduct of different actors in the energy sector. While efficacy, efficiency, costs, and benefits are important considerations in policymaking, consistency and continuity of policies are also important in gaining and sustaining confidence of investors. This is critical because energy sector investments are capital-intensive, long-lived and high-risk ventures, and once set into motion, are difficult and very costly to rollback. This article offers a quick overview of Pakistan’s experience in power sector policymaking and implementation. First, it lists the prominent power policies issued since 1994 and…
“Not in his goals but in his transitions the man is great.” (Ralph Waldo Emerson) According to media reports, our prime minister is angry because his plan for energy conservation, launched with high hopes recently, has not been delivering the expected results. He should not lose heart as nothing was wrong either with his intent or the potential of energy savings in the targeted activities. He had unfortunately pinned hope on an institutional system that is capable of frustrating even the best intents and plans. Our institutions, whether in the power sector, oil and gas sector, or any other sector…
Launching a focal institute for the security step is admirable “Being unconquerable lies with yourself; being conquerable lies with your enemy.” (Sun Tzu in “The Art of War”) Pakistan’s energy system, like that of most other countries in the world, is becoming increasingly vulnerable to cyberattacks. Such risks are feared to grow even more in the future, both in frequency and intensity, as information and communications technologies (ICTs) make rapid inroads into every part of this system. These threats demand serious and urgent attention from our government, regulatory bodies, energy sector managers, and other stakeholders because the cybersecurity of the…
The turmoil in the world energy market triggered by the Russia-Ukraine conflict has exposed Pakistan’s vulnerability to fuel supply disruptions and price shocks as we meet roughly 50% of our energy needs via imports, mainly oil, LNG, and coal. Last year, these imports cost us about 27 billion dollars which could rise even further in the future. This poses serious risks to our economy, defense, and society. Naturally, the government has sprung into action and is deliberating on multiple options to alleviate and, if possible, eliminate these risks. As over 35% of the fuel imports go to power generation in…
Every time a new government takes control of our country, it starts to reinvent the wheel, always with new zeal and zest. It vows to revolutionize the country in a matter of months, not years, with slogans like (in no particular order) “turn around Pakistan”, ‘make Pakistan an Asian tiger”, “a job paradise for foreigners”, and the list goes on ad infinitum. Taskforces are formed overnight to work on “war footings”, mostly composed of the same old hands, hoping this time they will discover the “treasure” their eyes had missed previously. The latest addition to this colorful potpourri of slogans is…
Fast-Track Solarization Initiative by Our Government Our government has recently announced that it intends to install 10,000 MW of photovoltaic (PV) systems in the country on a fast-track basis. According to media reports, these installations will include rooftop PV systems in residential, commercial, and government buildings, agricultural tube wells, and on a couple of thousand 11 kV distribution feeders. The motivation behind this initiative is the government’s desire to reduce the country’s present dependence on imported fuels whose prices have sky-rocketed in the aftermath of Russia’s invasion of Ukraine and threaten the economic stability and security of the country. While…
The geopolitical landscape is changing rapidly in the aftermath of Russia’s invasion of Ukraine. Russia is exploiting European countries’ heavy dependence on its gas supplies to coerce them to reverse their previous move which Russia had perceived as a threat to its security. The prices of fuels in the global market as a result have hit the roof and pose serious threats to the economic and political stability of many countries including Pakistan. This situation has prompted local strategists to reiterate the criticality of energy self-reliance by shifting from imported fuels to local resources. Adding 10,000 MW of solar photovoltaic (PV) systems in the country on a…
Power generation from renewable sources such as solar and wind offers numerous benefits to society but poses multiple challenges also. In line with the global trend, our government also has set ambitious targets of 20 percent by 2025 and 30 percent by 2030 for their deployment in the country’s power grid. This is arguably a good first step as renewables can power our dreams of economic development in a secure, affordable, and sustainable manner. Turning dreams into reality, however, requires that supportive policy and regulatory frameworks be placed on the ground for embracing renewables. Below we identify some major challenges…
“The true voyage of discovery does not lie in seeking new landscapes, but in having new eyes.” (Marcel Proust) Electricity distribution which was thought to be the last-mile of the electricity supply industry’s value chain until recently is rapidly gaining new importance. It’s now being considered the frontline of this business where most of the action will take place in the future. A consensus is evolving among industry experts that merely improving the efficiency of this system and revenue collection, important as these are, may not be sufficient to confront the vexing challenges this industry faces. Its distribution function will…
Power generation from renewable sources such as solar and wind offers numerous benefits to the country but poses multiple challenges. Our government has set ambitious targets of 20 percent by 2025 and 30 percent by 2030 for their deployment in the country’s power grid. This is arguably a good first step as renewables can help powering our development dreams in a secure and sustainable way. Turning dreams into reality, however, requires that our government timely puts in place policy, institutional, and financial frameworks conducive for renewables. We don’t see such frameworks at present which raises concerns that we may miss…
Electricity generation from renewable sources such as solar and wind offers numerous benefits to the country, but their intermittent and variable nature poses multiple challenges when their share in the grid exceeds beyond certain minimum levels. Without dedicated storage, renewable power generation plants are considered “non-dispatchable” as system planners and operators cannot rely on them to serve the continuously changing demand of electricity in their systems the same way they are accustomed to in the traditional grid. Below, we explore the viability of a facility, renewable power control center, between renewable generators and grid operators that can ease to a…
National Electric Power Regulatory Authority (NEPRA) has recently issued its flagship annual State of Industry Report 2021 (SIR21). The purpose of such reports by a regulator generally is to provide an overview of the regulated business, summarize major developments during a previous period, state its own position on key issues, and offer insight into its approach to regulating this business in the future. NEPRA has done a good job as SIR21 is much improved and comprehensive than this report’s previous editions. The SIR21 also identifies some key issues and challenges facing the power industry in Pakistan and offers recommendations for…
To maintain a precise balance between demand and supply, electric utilities are obliged to keep sufficient generation capacity in their systems, called “resource adequacy”. It’s necessary to deal with three types of uncertainties: uncertainty in forecast demand, unexpected outages of generation plants, and abnormal weather—all of a random nature, predictable to some extent but not entirely. Utilities try to maintain extra generation capacity in their system on top of the expected peak demand commonly termed as “reserve margin”. How much generation capacity will be adequate for a system is a question of how much reliability we want in our supply,…
Our new finance minister, Shaukat Tarin, has strongly urged the IMF to reconsider its demand for raising electricity tariff by 5.36 rupees per unit over the next two years. We hope he succeeds in persuading the Fund’s managers against its demand as this quantum of rate increase, in plain words, is akin to pushing the power sector into dire straits from which escape may be too difficult, if not impossible. Rate hikes may be an easy way out for the government to circumvent the issue. But this will only mask the chronic problems of the power sector for a while,…
While Pakistan’s frustration with the Organization of Islamic Cooperation (OIC) for not playing an active role in ending Indian brutalities in occupied Kashmir exposes our economic dependence on foreign countries, it also brings to limelight our vulnerabilities in the energy sector. This has prompted some experts to re-emphasize the criticality of seeking energy independence by shifting from imported fossil fuel supplies to indigenous energy resources. In today’s interconnected and interdependent world, however, “energy independence” may just be a mirage chasing which can lead us to isolationism and also may not be worth the cost. A better goal to pursue will…
Dr. John P. Holdren (Advisor on S&T to US President Barack Obama for his double term in office and who has been a distinguished faculty at Harvard and Berkley for over two decades) believes that there are two ways a society can get into trouble with “energy”: either not having enough of its endowment or having it but the socio-economic and environmental cost of accessing it moves beyond its reach. Perhaps, what Dr. Holden did not expect was that a society can have sufficient endowment of energy supplies but lack of vision and ill-conceived policies of its leaders can still…
“The true voyage of discovery lies not in seeking new landscapes, but in having new eyes.” (Marcel Proust) Recent developments in the global energy markets have created an unprecedented and unique opportunity for our leaders to transform the seriously ailing power sector of the country into a viable contributor to powering nation’s development dreams. It would be unfortunate if they miss this opportunity by continuing to run this sector on traditional lines that will lock the nation into technologies and systems that will soon become a serious liability for the nation. They must act boldly to substitute the existing unsustainable…
“When the world is predictable, you need smart people. When the world is unpredictable, you need adaptable people,” had commented Henry Mintzberg, a distinguished professor at Canada’s McGill University, who has studied the formal and informal roles of managers in business success more than anyone else among his peers. His seminal book, “The Rise and Fall of Strategic Planning” and a paper on the same theme in Harvard Business Review, both published in 1994, had sent jitters through the spines of business school faculties and corporate executives across the world. “Strategic planning”, met its coup de grace in the 90s,…
Our government has raised the electricity tariffs yet again. These frequent increases in electricity tariffs are problematic for a number of reasons, but more than anything, it clearly demonstrates that the government has no new solution in hand to deal with power sector issues other than taking the path of least resistance — further squeezing those helpless consumers who are already struggling miserably under the heavy burden of an endless streak of electricity tariff hikes in the country. There are news reports also that the government through its Economic Coordination Committee (ECC) has approved increase of power tariff by 26…
Speaking to Khaleej Times on the sidelines of the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC 2019) recently, Special Assistant to our Prime Minister on Petroleum, Nadeem Babar, announced that the government was targeting 64 percent of green power in the national grid by 2025. While it isn’t a target beyond reach, the government will have to pursue it very carefully because without the supporting transmission and distribution (T&D) networks, imaginative tariffs, and facilitative institutional capacity, it could add to the nation’s already-serious energy woes, also hurting the very cause of otherwise a laudable goal of securing sustainable energy…
The global energy markets are in flux and the scene is changing rapidly. Most analysts believe that profound shifts are shaping the way energy is supplied and demanded. They also feel that these are not mere occasional aberrations or cyclic adjustments but a fundamental transformation is underway that will persist much longer and have important implications for developed and developing countries alike. Though the changing energy scene poses many challenges to our policy makers, it also offers a rare opportunity for them to reshape the nation’s energy future along more secure and sustainable lines. There are striking developments on the…
Some new and disruptive business forces are rendering the traditional electricity business model obsolete and it may not serve well to accomplish the government’s strategic goals in the power sector. It is imperative that this business in the country be reorganized along a more dynamic, flexible, and innovative lines to embrace the emerging realities and new developments. The risks of not acting timely could be serious as well as expensive, and also difficult to correct later. Four major developments in the world’s electricity marketplace have altered the fundamentals of the electricity business, and are raising serious questions about the continued…