Unanimous NA move on power crisis

ISLAMABAD: After a six-day debate, the National Assembly unanimously decided on Monday to set up a special house committee to examine the causes of power shortages and recommend remedies even though the government said there were hardly any outages now after it tackled the recent crisis that provoked nationwide protests.

A motion adopted by the house on a proposal from the PML-N, to which the PPP agreed, authorised Speaker Fehmida Mirza to name the committee soon in a consensus that came despite bitter uproars over two unrelated matters and in a marked contrast to daily PML-N walkouts during the previous fives days of the debate and sit-in outside the presidency to protest against intense power cuts, or loadshedding, in the past week.

The day’s uproars were a controversial political role adopted by former Sindh home minister Zulfikar Ali Mirza over the affairs of Sindh province and allegations by the government-allied Muttahida Qaumi Movement of persecution of an estranged wife of a PML-N lawmaker and son of Punjab Chief Minister Shahbaz Sharif.

The speaker, who chaired the proceedings for the first time after absence for the past few days due to an official visit to Malaysia, kept her usual poise in the face of some highly critical remarks of two MQM members against Dr Mirza, her husband, who got support for his challenge to the MQM over the affairs of Sindh despite last week’s return of the party to the PPP-led coalition.

After Water and Power Minister Naveed Qamar, who asked for an early cut-off date for the recommendations of the special committee while winding up the debate with an explanation of a turnaround in power generation within days to over 14,000MW from a suddenly dropped level of 7,000MW and the government’s future plans, the speaker asked all parties in the house to give her names of their nominees for the body so it could present its report at the start of the next session of the house due to begin on Nov 14.

“Today we can say there is none (of), or hardly any power outages anywhere in the country,” the minister remarked while explaining the government’s handling of the situation blamed on a combination of problems that he said had been tackled with improvement in river inflows to hydro-electric dams, a partial payment of arrears worth Rs11 billion to two private power companies to ensure oil supplies to them and restart of two nuclear plants, one of which had tripped and other closed for refuelling.

But he made it clear the present relief was temporary and said there was still need to enhance capacity because the demand would rise to between 17,000-19,000MW in summer.

“All our problems have not gone away,” he said while warning against complacency, and noted what he called “lack of governance” within the power distribution companies, which he would have to fend for themselves with reformed managements after the planned dissolution of the Pakistan Electric Power Company in the next 10 to 15 days.

Among projects for the future, he cited the Diamer-Bhasha dam on the river Indus, whose foundation stone is due to be laid on Oct 18, encouragement of privately-run wind power projects, some of which he said should start generation within 18 months before the present government runs out its five-year term in 2013, and coal-fired projects to be run initially with imported coal and later with coal extracted from the Thar area in Sindh.

The implementation of all these projects and the ideas that the new house committee might come up with, he said, would help the country not only to close the present gap between supply and demand but also go beyond to see national growth “in leaps and bounds”.

Earlier, the MQM marked its return to the house after the absence of some days it took for a reconciliation with the PPP by sparking the first uproar of the day when its member Asif Hasnain accused the PML-N’s provincial government in Punjab of punishing what he described as an estranged wife of PML-N lawmaker Mohammad Hamza Shahbaz Sharif by instituting criminal proceedings against her and influencing an anti-terrorism court.

MQM parliamentary leader and Minister for Overseas Pakistanis Farooq Sattar added fuel to the fire by taking up the issue even more vociferously, and inviting more PML-N shouts, despite an advice from PPP chief whip and Religious Affairs Minister Khurshid Ahmed Shah to avoid raising members’ personal matters, before the speaker adjourned the house for Maghreb prayers.

PML-N parliamentary leader Sardar Mehtab, who led the protests from his party, was once heard saying “we don’t want to hear this ‘bakwas’ (foolish talk)” as he asked the chair to switch off Mr Sattar’s mike, which was done more than once.

Tempers on both sides seemed to have cooled down when the house reassembled after the break for prayers, but more was to come at the fag end of the sitting after a PML-N member, Shirin Arshad, asked why the government was not taking action on some charges made by Dr Mirza with an oath of the holy Quran, only to provoke an angry outburst from MQM’s Waseem Akhtar, who said the former minister should be arrested under the Maintenance of Public Order ordinance for allegedly threatening law and order in Karachi.

And after a member of the government-allied Awami National Party, Bushra Gohar, used some words of praise for Dr Mirza by saying he had substantiated his charges with some proofs and another PML-N member, Ms Qudsia Arshad, said “I salute Zulfikar Mirza”, another retort came from MQM back-bencher, Sajid Ahmed, who said “all those who tried to liquidate the MQM themselves perished and the MQM is still there”.

From the PPP benches, only veteran party parliamentarian Zafar Ali Shah expressed support for Dr Mirza by advising members against making allegations against persons who cannot respond in the house.

No remarks from either side were expunged before the house was adjourned until 5pm on Tuesday.

Source: http://www.dawn.com/2011/10/11/unanimous-na-move-on-power-crisis.html

ved) � h t � hb� rs, a Coptic priest said, while an AFP correspondent saw bodies with gunshot wounds at the hospital.

The grand imam of Al-Azhar, Ahmed Tayyeb, the Sunni religious head, called for crisis talks between Muslim and Christian leaders “in a bid to contain the crisis”, state television said.

Some commentators warned of civil religious strife, but others said the clashes were fuelled not only by sectarian strife but also by anger towards the security services and the military council which succeeded Mubarak.

Government-backed provocation was also blamed.

Users of social networking sites such as Twitter said the initial clashes outside the state television building on the Nile were provoked by “thugs” at the scene, while the broadcaster was accused of fanning anti-Coptic sentiment.

On Monday, the authorities announced the hanging of a man sentenced to death for shooting six Copts last year.

Copts complain of systematic discrimination, but since Mubarak’s fall, tensions have also mounted between the military – initially hailed for not siding with Mubarak – and groups which spearheaded the revolt.

Source: http://www.dawn.com/2011/10/11/egypt-probes-deadly-sectarian-clashes-first-victims-buried.html

Is circular debt the real issue?

By Salman Khalid and Kamal Munir 

PAKISTAN has been facing a series of power crises over roughly the last two decades. However, since 2007, the situation has deteriorated rapidly.

As a result of severe electricity shortage, industry, commerce and agriculture have all taken serious hits with the country’s growth prospects dimming significantly. At the same time, residential consumers have had to endure over eight-to-12-hour blackouts in major cities. The situation is even worse in rural Pakistan.

Surprisingly, the total energy produced in the country has actually decreased nearly 10 per cent between 2007 and 2010.
This is primarily due to lower-capacity utilisation, which in turn has been the result of ‘circular debt’, a concept that has been bandied around freely over the past few years as the primary problem that besets energy production in Pakistan.

However, despite its dominance of policy discourse, circular debt is not the fundamental issue here. The two most glaring reasons behind the present mess Pakistan finds itself in are the 1994 energy policy and the resultant extreme over-reliance on expensive imported fuel mix.

It is easy to forget that the roots of the present power crisis can be traced to almost two decades back with the advent of the highly generous 1994 power policy for independent power producers (IPP). At that time the country’s electricity generation relied on a fuel mix of approximately 70:30 in favour of hydro versus thermal. This changed dramatically over the next decade with the fuel mix going to 30 per cent hydro and almost 70 per cent thermal by the end of 2010.

This dramatic shift in generation source occurred because the 1994 power policy (and later the 2002 power policy) did not discriminate on fuel source being employed and made the country hostage to fluctuations in international oil and gas prices (the country does not possess either commodity in sufficient quantity).

The cost of this strategic policy-level folly can be understood with the following comparison. As per the National Power System Expansion Plan 2010-2030, as of 2010, Wapda (employing hydro production) generated electricity at Rs1.03/kWh ((1.2 cents/kWh) while public-sector thermal power plants provided the same at Rs8.5/kWh (10 cents/kwh).

However, the IPPs (primarily thermal) provided the same at Rs9.58/kWh (11.2 cents/kWh). As a result, the average blended cost of generation was Rs6.6/kWh (7.7 cents/kWh) in 2010 which further increased to Rs9.81/kWh (11.5 cents/kWh) for the end consumer due to line losses and theft in the transmission and distribution systems.

It should be noted that the above numbers underestimate the true cost because the cost of energy from old power plants is substantially lower due to repayment of debt. Most new thermal IPPs are charging in the range of 15-18 cents/kWh at current oil prices. As a result, tariffs will substantially increase further as the world economy comes out of recession over the next few years and oil/gas prices jump (with the US trying to print its way out of recession).

Even after adjusting for debt repayment, power production through indigenous hydro resources comes out much better than what we are given to believe.

The estimated cost of energy stands at 1.6 cents/kWh for Kalabagh dam with a vast majority of new hydros expected to come under 4.5 cents/kWh as per a recent NTDC (National Transmission and Despatch Company) report. Furthermore, the country has so far completely failed to develop its coal reserves (only 30MW coming from coal) which are estimated at 175 billion tonnes (the second largest in the world). Engro estimates a tariff of 10-12 cents/kWh for Thar coal-based power production based on the current policy. Incredibly, the world average for coal-based power production in the energy mix is 40 per cent while it is only 0.1 per cent in Pakistan.

To make matters worse, many of the thermal IPPs set-ups under both the 1994 and 2002 power policy are of inefficient design (single cycle rather than more efficient combined cycle) since these policies provided cost plus equity return of 15 per cent irrespective of the efficiency of the technology/fuel source being used in the power plant.

Many of these IPPs would normally be used for load-balancing (matching sudden jumps in demand etc) in other countries and would fall low in the merit order for power plants used but are instead employed for satisfying standard base demand in Pakistan. One begs to question the wisdom and/or sincerity of the policymakers of the country who completely ignored two of the biggest energy resources available locally which cost substantially less than the options they opted for.

Some people provide the excuse regarding the political deadlock over the Kalabagh dam and hence the need for Pakistan to go to the oil/gas-based IPP route. But what stopped the policymakers from going down the coal route, let alone hydro projects apart from the Kalabagh dam? Why couldn’t the Diamer-Bhasha dam or the Bunji or Doyian dam be commenced in the early 1990s instead of a Hubco?

Circular debt is a red herring. The core problem lies in wrong policy choices made in the early 1990s that have continued since then. These choices, made for whatever reasons (pressure from the World Bank, corruption, incompetence) have shifted Pakistan away from self-reliance in energy generation and landed us at the mercy of daily fluctuations of the international oil/gas markets and choked industrial progress in the country.

Taking subsidies away is not the solution. Electricity should not only be available to the wealthy! The provision of affordable electricity is the basic right of every citizen.

In a country that has unparalleled resources to generate electricity the present situation is unacceptable. Printing money to clear circular debt will hardly deliver us from this problem. For Pakistanis to be able to get an affordable, sufficient, long-term energy supply, the sustainable solution lies in revisiting the ridiculous power policies of 1994 and 2002 and exploiting other, more sensible sources of generation.

Salman Khalid has managed investments in power generation in Pakistan, Turkey, Bangladesh and Saudi Arabia. Kamal Munir teaches Strategy and Policy at the University of Cambridge.

Source: http://www.dawn.com/2011/10/10/is-circular-debt-the-real-issue.html