Business

ISLAMABAD: The inefficient electricity production and chronic line losses as the major cause for energy crisis in Karachi Electric Supply Company (KESC) mostly because of inept national power regulator NEPRA.

A recent study conducted by Sustainable Development Policy Institute (SDPI) suggests the only way out of this crisis is to invest and buy affordable electricity from hydro power, improve fuel efficiency of power plants and introduce ‘smart grid’ with advanced metering system.

The report underpins the causes of chaotic energy situation in Pakistan while discussing KESC as a case study. The findings, conclusions and recommendations of the report are equally applicable to all thermal power plants of the country, the author claims.

“In all successful privatizations of public sector organizations, the regulator plays vital role on post privatization period. In the case of KESC, regulatory role of NEPRA and non-existence monitoring mechanism at Ministry of Water and Power became one of the main causes behind current energy crisis”, the report says.

It adds that role of NEPRA have curtailed only to tariff determination which can be done through a simple software application. The report further suggests as per the mandate, NEPRA is supposed to act independently and exercise autonomous decisions. “But this is evident that NEPRA has become yet another department working under the Ministry of Water and Power.”

The report calls upon NEPRA to broaden its role from tariff determination to formulate standards, regulate energy sector, give incentives for improving fuel efficiency and play its due role in addressing energy crisis in Pakistan.

It is the first ever study that comprehensively assesses the performance of KESC since its nationalization in early fifties. According to the report KESC has been giving huge subsidy even after privatization which undermines the basic purpose of privatization.

The report illustrates that thermal power plants in Pakistan, particularly of KESC, operate at extremely low efficiency and consume very high quantity of fuel to generate per unit of electricity. KESC takes 11 to 18 cubic feet of gas to generate one KWh of electricity whereas plants of other companies such as Uch Power, Saif power and Orient Power take only 7.37, 7.47 and 7.56 cubic feet of gas respectively for generating one unit.

On regional level, when gas consumption is compared with thermal plants of Bangladesh, the consumption of KESC was found to be almost double. “Control of fuel costs, exercised through benchmarks alone could help substantially reduce or even eliminate the subsidies that government has to pay for reducing tariff to a politically acceptable level,” the report adds.

The report recommends to go for cheap and green hydro and wind power projects which are not functioning due to lack of investment. “Dams like Bunji, Dasu, Lower Spat, Kohala and Tarbela 4th extension are capable of adding 15631 MW into the system.

The feasibility studies of most of these projects have been completed but the development is stalled or slowed down due to lack of fund and inefficiencies within the departments,” report adds. The report calls upon KESC and authorities concerned to invest and buy electricity from these hydro power plants at minimal cost instead of purchasing it from (Independent Power Producers (IPPs) at very high costs.

Currently, KESC is purchasing electricity on average at the rate of Rs 8/KWh to Rs 16/ KWh which is very high as compare to Rs 0.37/KWh obtained from Hydro power plants with minimal wheeling charges by NTDC. The report says, increased dependency on fossil fuel is the fundamental cause of present energy crisis and the best option available is to skew the generation mix with the renewable energy resources.

It recommends KESC to introduce ‘smart grid’ with advanced metering system. This may include construction of shielded networks for electricity supply and application of remote metering at each customer connection and also at the transformer point.

“KESC can refer to the experience of Lahore Electric Supply Company (LESCO), which successfully implemented smart meters in the old walled city of Lahore and brought down the line losses from 17.8 per cent to 3.5 per cent within 10 months,” the report adds. It strongly suggests to formulate the performance standards for thermal power plants focusing on increasing plant efficiency to save the fiscal resources of GOP spent on subsidizing the power sector.

<<Go back