Energy Crisis and IPPs

 In the last 30 years, Pakistan has faced an epic energy crisis, and the government has fumbled spectacularly in trying to match supply with demand. For some mysterious reason, policymakers have completely ignored green energy options like hydro power, solar, and wind energy. It could be a lack of political will or just plain laziness of the ruling elite. Our politicians seem to be afflicted with a chronic case of "poor decision-making." They love quick fixes, no matter how expensive or impractical.

Ironically, Pakistan is supposed to be a democracy, with leaders elected by the people. Yet, they craft policies that are completely out of touch with what the population needs. The topic of electricity tariffs has become the favorite subject of endless debates because, despite all the talk, the energy crisis remains as persistent as ever. 

Not investing in green energy is almost criminal. Households can't afford fossil fuel energy, and to make matters worse, the cost per kilowatt keeps rising because our so-called government isn’t tapping into renewable energy sources. The result? A tough tariff regime that’s hitting poor domestic consumers hard. Consumers are even charged a sales tax on their electricity bills, which doesn’t make any sense. They’re not reselling the electricity, so this tax should really be called a "consumption penalty."

Poor consumers struggle to cut their bills down to affordable levels, but it’s a losing battle. Every month, when they see their electricity bill, it feels like a shock – not an electric shock, but an energy trauma. Maybe psychologists should start studying this new type of trauma since the government isn’t doing anything about it.

Once upon a time, there was a wonderful organization for generation, transmission, distribution and setting up tariff to collect electricity bills from consumers, called "Water and Power Development Authority WAPDA." This organization took good care of poor consumers and would sell electricity at affordable tariff.

Then in 1997, NEPRA, the notorious National Electric Power Regulatory Authority, came into being through an ACT No. XL OF 1997 of the then parliament:

 "An Act to provide for the Regulation of Generation, Transmission and Distribution of Electric Power," which stripped WAPDA of its authority.

WAPDA and PEDO were made step-siblings through Clause 30 of the NEPRA Act, which I’ll reproduce for my beloved audience:

Quote 

"WAPDA and PEDO to be licensees.—Notwithstanding anything contained in this Act for a period of six months from the commencement of this Act, the WAPDA and the PEDO shall be deemed to be licensees under this Act, and shall, during the said period, apply for appropriate licences in accordance with the provisions of this Act." 

Unquote

WAPDA is no longer an authority and is now treated as a dependent power project (DPP) in contrast to Independent Power Projects (IPPs), and it should be renamed.

The legitimate parent, WAPDA, was made an offspring of NEPRA through this notorious  Act. The Independent Power Producers (IPPs) are the masterminds behind this marathon of madness. NEPRA spawned the IPPs in the '90s, and now they’ve become giant tycoons, fed by the poor consumers. Whether these IPPs are legal or not is debatable, but what they’re doing to consumers is downright parasitic.

Remember those biology classes where you learned about parasites? Let’s refresh: A parasite is an organism that lives on or in a host and gets its food at the expense of the host. IPPs are just like parasites. They live off consumers, sucking their hard-earned cash through cables and wires.

The Energy Policy of Pakistan was crafted by some very clever folks, but they couldn’t stop Raja Pervaiz Ashraf from dreaming up rental and private power. Just to clarify, "conceive" here has nothing to do with gynecology.

In 2007, WAPDA’s role was limited to hydro power generation and maintenance only, while IPPs were given free rein. WAPDA can generate power but can't sell or set tariffs. According to the Pakistan Economic Survey 2021-22, the installed electricity generation capacity is 41,557 MW, but the outdated grid can only handle 22,000 MW. So, many IPPs don't run because of dispatch limitations, yet government (  still pays them based on capacity, not actual generation.

These contracts were clearly signed in bad faith, with no regard for the poor consumers who foot the bill. "For the financial year 2023-24, consumers will pay Rs 1.3 trillion in capacity costs to power plants that remain idle. " This was revealed in a Senate committee meeting chaired by Senator Saifullah Abro.

The grim outcome? Trillions of rupees are being squeezed from the already thin skins of poor consumers. This entire saga reads like a tragicomedy, with the public left to bear the brunt of disastrous policies.