Finally, some power reforms on cards

[ziaulislam]

1. GENCOS of 4000mw to be retied
2. All captives plants to be closed (inefficient small generators run by different industries in gas producing provinces using cheap gas, 18th amendment screwed us bad here)
3. Electricity cost to be jacked up by 1.9 rs
4. saving of 1.5-2 rupees expected with renegotiations with IPPs(Still only MOUs)
5. govt own LNG plants will further decrease its profit margin-->meaning privatization will be less attractive here
6. Distribution companies will be further devolved to provinces---> no real plan for privatization/efficacy increase

this should plug in the circular deficit cost but will fuel further inflation
and is dependent upon the MoUs changing to contracts


the elephant in room is still distribution losses is not addressed, everything else is addressed

 

[Pakistansdefender]

1. GENCOS of 4000mw to be retied
2. All captives plants to be closed (inefficient small generators run by different industries in gas producing provinces using cheap gas, 18th amendment screwed us bad here)
3. Electricity cost to be jacked up by 1.9 rs
4. saving of 1.5-2 rupees expected with renegotiations with IPPs(Still only MOUs)
5. govt own LNG plants will further decrease its profit margin-->meaning privatization will be less attractive here
6. Distribution companies will be further devolved to provinces---> no real plan for privatization/efficacy increase

this should plug in the circular deficit cost but will fuel further inflation
and is dependent upon the MoUs changing to contracts


the elephant in room is still distribution losses is not addressed, everything else is addressed

First even these reforms were not there since democracy came to rescue us.
These 'ahal' opposition has done nothing but mounted more and more circular debt on us.
Now atleast we going to solve the elephant in the room... Look the mou's are going to be signed in few days. The terms are successfully negotiated.
It would greatly decrease the circular debt. And the rest of the payment is paid by electricity hike. So government circular debt would be zero.
And then government would pay the old accumulated circular debt in 3 installments to all the companies.
Then controlling power distribution and transmission work is easy. It's basically human error or bribery etc.
Look now nobody has thought it before but when government went ahead, they are successfully clamping down on illegal petrol pumps.
So they can also go after the human error in this which can reduce the losses more then 50 to 70 percent. Its basically our kpk and balochistan provinces where infrastructure doesn't exist in proper way. Sadly. That infrastructure would be laid down when there is no more debt and government actually has profit to built some.
This is a start. It would revolutionize the entire system.

 

[Syed1.]

Good to hear... We cannot industrialize with expensive electricity. Vietnam has PEAK rate of 13c/kwh for industrial users while off peak is 4c/kwh. How can you compete when after giving huge subsidy government only managed to give relief to export industry and even that sector pays 7c/kwh.


I think we need to incorporate mega dams in CPEC so that we have step increase in power generation and at low rate of 8-12c/kwh. If Akhori, Skardu and Kalabagh come online that'll add 12-15 GW of power and we can retire expensive oil and LNG plants.


Btw losses through transmission and distribution (kunda system) is roughly 25-30%. Definitely a big chunk but not the main reason. The major reason is democracy is best revenge where PPP and PML-N were taking revenge on Pakistani quam by doing expensive contracts for power projects. Some projects were as expensive as 21c/kwh. In other countries these politicians would be jailed or hanged but in Pakistan we have ample supply of brainless zombie supporters.

 

[AsifIjaz]

Tabish gohar mentioned these points on dunya kamran khan k sath show 2 days back.. What he was not asked or the topic that were not touched are...
1.
Power theft or power losses
2.
Transmission network and its improvement.
On point number 2 he did discuss decentralization of the distribution network but nothing in detail like in other points mentioned in the original post here.

Anyways I have high hopes now that within 2021 we may finally start better performing power sector.

 

[ziaulislam]

Well. They have 2.5 yrs before brainless zombies bring back baby bilawal or mother of dragons the mad queen i.e maryum nawaz

 

[Path-Finder]

1. GENCOS of 4000mw to be retied
2. All captives plants to be closed (inefficient small generators run by different industries in gas producing provinces using cheap gas, 18th amendment screwed us bad here)
3. Electricity cost to be jacked up by 1.9 rs
4. saving of 1.5-2 rupees expected with renegotiations with IPPs(Still only MOUs)
5. govt own LNG plants will further decrease its profit margin-->meaning privatization will be less attractive here
6. Distribution companies will be further devolved to provinces---> no real plan for privatization/efficacy increase

this should plug in the circular deficit cost but will fuel further inflation
and is dependent upon the MoUs changing to contracts


the elephant in room is still distribution losses is not addressed, everything else is addressed

 

[TheSnakeEatingMarkhur]

1. GENCOS of 4000mw to be retied
2. All captives plants to be closed (inefficient small generators run by different industries in gas producing provinces using cheap gas, 18th amendment screwed us bad here)
3. Electricity cost to be jacked up by 1.9 rs
4. saving of 1.5-2 rupees expected with renegotiations with IPPs(Still only MOUs)
5. govt own LNG plants will further decrease its profit margin-->meaning privatization will be less attractive here
6. Distribution companies will be further devolved to provinces---> no real plan for privatization/efficacy increase

this should plug in the circular deficit cost but will fuel further inflation
and is dependent upon the MoUs changing to contracts


the elephant in room is still distribution losses is not addressed, everything else is addressed

Pakistan needs to create artificial grids starting from small villages towards cities if we have to...

After that distribution losses need to be sorted out..

And system needs to be secure from cyber attacks..

 

[Patriot forever]

1. GENCOS of 4000mw to be retied
2. All captives plants to be closed (inefficient small generators run by different industries in gas producing provinces using cheap gas, 18th amendment screwed us bad here)
3. Electricity cost to be jacked up by 1.9 rs
4. saving of 1.5-2 rupees expected with renegotiations with IPPs(Still only MOUs)
5. govt own LNG plants will further decrease its profit margin-->meaning privatization will be less attractive here
6. Distribution companies will be further devolved to provinces---> no real plan for privatization/efficacy increase

this should plug in the circular deficit cost but will fuel further inflation
and is dependent upon the MoUs changing to contracts


the elephant in room is still distribution losses is not addressed, everything else is addressed

"We have to somehow overcome the deficit left behind by the PML-N government. We have to make this decision to ensure that industries continue to function,” he said. Giving details of capacity payments to IPPs, he said Rs185 billion was paid to IPPs in 2013, Rs468 billion in 2018, Rs642 billion in 2019; Rs860 billion in 2020 and the payment would reach Rs1,455 billion in 2023"

"Tabish Gauhar highlighted the key initiatives undertaken by the government to improve the power sector and reduce circular debt. The government’s negotiations with IPPs are in the final stage to convert the already signed MoUs into final binding contracts, which would reduce burden on the power sector by more than Rs800 billion over the next two decades.

“Agreements with the IPPs regarding the ‘take and pay’ clause will end by the first of next month,” he said. “Along with an even greater reduction in the rate of return on the government’s own power plants, we expect a total reduction of Re1 to Rs2 per unit in the coming years,” Tabish said."

Owing to these agreements, the increase in power tariff in one year alone (2019-2020) on account of compulsory capacity payments would have been Rs2.18 per unit but the present government decided to increase the rate by just Rs1.95 per unit in 2021, he said.

Power tariff up by Rs1.95

ISLAMABAD: The government on Thursday increased the power tariff by Rs1.95 a unit to overcome the deficit inherited from the former PML-N government due to its flawed policies and to keep the...

www.thenews.com.pk

When will we hold accountable the people who signed these contracts. I insist PTI government to let the circular debt grow unless the authorities who brought plmn to power either hold them accountable and punish them or pay the cost themselves. These contracts are treason, capacity payments take or pay clauses astounding ROI, I am sure these culprits have a constant fixed % of kickbacks.
PTI is just a donkey who is hell bent on correcting the abuse done to this country in the last decade.

 

[ziaulislam]

"We have to somehow overcome the deficit left behind by the PML-N government. We have to make this decision to ensure that industries continue to function,” he said. Giving details of capacity payments to IPPs, he said Rs185 billion was paid to IPPs in 2013, Rs468 billion in 2018, Rs642 billion in 2019; Rs860 billion in 2020 and the payment would reach Rs1,455 billion in 2023"

"Tabish Gauhar highlighted the key initiatives undertaken by the government to improve the power sector and reduce circular debt. The government’s negotiations with IPPs are in the final stage to convert the already signed MoUs into final binding contracts, which would reduce burden on the power sector by more than Rs800 billion over the next two decades.

“Agreements with the IPPs regarding the ‘take and pay’ clause will end by the first of next month,” he said. “Along with an even greater reduction in the rate of return on the government’s own power plants, we expect a total reduction of Re1 to Rs2 per unit in the coming years,” Tabish said."

Owing to these agreements, the increase in power tariff in one year alone (2019-2020) on account of compulsory capacity payments would have been Rs2.18 per unit but the present government decided to increase the rate by just Rs1.95 per unit in 2021, he said.

Power tariff up by Rs1.95

ISLAMABAD: The government on Thursday increased the power tariff by Rs1.95 a unit to overcome the deficit inherited from the former PML-N government due to its flawed policies and to keep the...

www.thenews.com.pk

When will we hold accountable the people who signed these contracts. I insist PTI government to let the circular debt grow unless the authorities who brought plmn to power either hold them accountable and punish them or pay the cost themselves. These contracts are treason, capacity payments take or pay clauses astounding ROI, I am sure these culprits have a constant fixed % of kickbacks.
PTI is just a donkey who is hell bent on correcting the abuse done to this country in the last decade.

Lol
Look this isnt our first roadio and it wont be the last..

Dot you think the establishment knew how these people bankrupted the country in 1998..doesnt evert paksitani knows?
I was in third grade and i knew ..a person in 3rd grade has IQ of 70. Pratically an IQ of moron but even i knew that country was bankrupted. I came to know about it from my illiterate hair dressor..$$$... . droped by 80%, inflation was over 20% and bank accounts were locked..followed by 3 years of recession even projects like ghazi brotha stopped due to non payments..Motorway 1 stopped due to bankruptcy ....


PMLN has bankrupted the country not once..it has done it multiple times and our mad queen & baby bilawal will do multiple times in the future..

This will make lots of people in establishment, media, military, beaucarcy and north punjab rich at expensive of the country..those people will simple stay in dubai untill someone cleans the mess..this time its imran khan who cleaning the mess..once he done he will be kicked out..

 

[Patriot forever]

Lol
Look this isnt our first roadio and it wont be the last..

Dot you think the establishment knew how these people bankrupted the country in 1998..doesnt evert paksitani knows?
I was in third grade and i knew ..a person in 3rd grade has IQ of 70. Pratically an IQ of moron but even i knew that country was bankrupted. I came to know about it from my illiterate hair dressor..$$$... . droped by 80%, inflation was over 20% and bank accounts were locked..followed by 3 years of recession even projects like ghazi brotha stopped due to non payments..Motorway 1 stopped due to bankruptcy ....


PMLN has bankrupted the country not once..it has done it multiple times and our mad queen & baby bilawal will do multiple times in the future..

This will make lots of people in establishment, media, military, beaucarcy and north punjab rich at expensive of the country..those people will simple stay in dubai untill someone cleans the mess..this time its imran khan who cleaning the mess..once he done he will be kicked out..

The problem with this cycle is there is no room for further exploitation. Next time if such situation as 1999 or 2018 is encountered it won't be just a hard period for the people and we can negotiate out of it by hard choices but will have to be paid in terms of land and sovereignty. While we were busy in nurturing dynasties and snakes how much our arch enemies have evolved, how much the disparity has increased be it economic or military. If this cycle is continued there is no future.

 

[fitpOsitive]

1. GENCOS of 4000mw to be retied
2. All captives plants to be closed (inefficient small generators run by different industries in gas producing provinces using cheap gas, 18th amendment screwed us bad here)
3. Electricity cost to be jacked up by 1.9 rs
4. saving of 1.5-2 rupees expected with renegotiations with IPPs(Still only MOUs)
5. govt own LNG plants will further decrease its profit margin-->meaning privatization will be less attractive here
6. Distribution companies will be further devolved to provinces---> no real plan for privatization/efficacy increase

this should plug in the circular deficit cost but will fuel further inflation
and is dependent upon the MoUs changing to contracts


the elephant in room is still distribution losses is not addressed, everything else is addressed

Local generation for each city. Two or three companies per city. Dams for water only..
That's the way to go. Power generation and distribution under local govt. Privatise it with monitoring.

 

[Patriot forever]

Local generation for each city. Two or three companies per city. Dams for water only..
That's the way to go. Power generation and distribution under local govt. Privatise it with monitoring.

The problem is not introducing a new system but what to do with the current one ( the agreements signed with IPP's whether you take the power from them or not you have to pay them for their full capacity) ( the state backed commercial loans and exorbitant guaranteed ROI) (The inefficiency, line losses and extreme level of political interference in DISCOS).

Even if you want to start up new their is no way out of these agreements that's where the problem lies. Each and every one of these contracts is a Reko Deq in hibernation.

Add to this the expensive imported fuel mix ratio in our generation.

 

[fitpOsitive]

The problem is not introducing a new system but what to do with the current one ( the agreements signed with IPP's whether you take the power from them or not you have to pay them for their full capacity) ( the state backed commercial loans and exorbitant guaranteed ROI) (The inefficiency, line losses and extreme level of political interference in DISCOS).

Even if you want to start up new their is no way out of these agreements that's where the problem lies. Each and every one of these contracts is a Reko Deq in hibernation.

Add to this the expensive imported fuel mix ratio in our generation.

If we go in international court for bribing our officials, then they will beg us for a way out. We are simply not handling them the way they should be handled.

 

[Bilal.]

1. GENCOS of 4000mw to be retied
2. All captives plants to be closed (inefficient small generators run by different industries in gas producing provinces using cheap gas, 18th amendment screwed us bad here)
3. Electricity cost to be jacked up by 1.9 rs
4. saving of 1.5-2 rupees expected with renegotiations with IPPs(Still only MOUs)
5. govt own LNG plants will further decrease its profit margin-->meaning privatization will be less attractive here
6. Distribution companies will be further devolved to provinces---> no real plan for privatization/efficacy increase

this should plug in the circular deficit cost but will fuel further inflation
and is dependent upon the MoUs changing to contracts


the elephant in room is still distribution losses is not addressed, everything else is addressed

If point 6 is not fixed. All this will amount to almost nothing. DISCOs need to be fixed (privatized) ASAP. Specially HESCO, SEPCO, QESCO and PESCO.

 

[AsifIjaz]

The fact of the matter is that Circular debt is here to stay, till at least 2028-2030.
This is because the majority of the agreements signed and executed between 2000 and 2020 are front-loaded ones i.e. higher tariffs during the initial 10 to 15 years of the operation and then decrease in their rates after every 5 to 10 years.

Now lets look at some facts:

1- Current situation:
a-
Almost all of the wind power, coal power, solar and the majority of the thermal based power plants all have a higher tariff which will start to decrease in the next 2 to 3 years and would continue to do so till 2028 to 2030.
a1- These projects make up more than 50% of the installed capacity.
a2- Positive for decreasing circular debt from mid-20s with current agreements and from this year if contracts are renegotiated
b-
Hydro-power plants (tarbela, mangla, ghazi brotha etc) and nuclear power plants (Chashnup series) bring down the power tariffs by a few rupees but their share/proportion is not enough to substantially offset the overall tariff.
c-
The situation is compounded by the fact that whether we take electricity from the IPPS or whether our system is unable to pick the power, the IPPs will charge their bills come what may.
c1- The same power plants are not running on the given or agreed efficiency but charge the tariffs based upon an average higher generation than what is being generated on a day to day basis. This is currently being investigated and can be beneneficial if handled properly.
c2- A big number of power plants agreements are tied to US dollar thus with devaluation, the ROI has turned into pure profits now. This will change with the expected new contracts.
d-
Power theft, power loss and inefficient transmission network currently account for 9-11% of the power being picked by NTDC and paid for by the government. I speculate that if power loss is brought down to 5% then this can easily decrease power tariffs by roughly 1 rupee. Sadly, no concrete action is in-sight and all is just on paper.

2- Future situation (expected):
e-
Public sector based LNG and hydro-power projects currently online or coming online in the next few years, if their tariffs are reduced by renegotiations then this will further decrease taking up new circular debt. Already announced by Tabish Gohar.
f-
Chinese sponsored hydro power plants on Jehlum and Indus producing a few thousand watts, when they come online in next few years can bring down the tariffs further IF their tariff is brought down by renegotiations like increasing the handing over of the project from 30 to 35 years or similar. Can be positive for reducing circular debt as they can help balance out higher tariffs.
g-
Thar coal power plants, their tariffs during initial decade or decade and a half is almost same as the tariff from furnace based power plants which is simply criminal. Nothing is in sight as everything is speculation. Abysmal situation
h-
From 2021 onwards we have a thousand plus capacity coming online on an annual basis in a NTDC system that already is tied to a higher generation capacity but with a lower transmission capability. Lahore-mitiari HVDC line will help here and so will the take or pay contracts being renegotiated. The government's recent offer to decrease power tariff by 25 to 50% on units consumed over and above historical units consumed is in line with the same point. The key here is industrialization, which is still a distant but alhamdulillah an achievable dream now.
i-
Captive power plants are notoriously inefficient but the current rate of natural gas makes them viable. These must be banned. This will decrease the circular debt of natural gas sector and will increase uptake of the electricity by industries as well. It was announced by Tabish Gohar, no concrete steps so far.

Conclusion:
- Positive steps (a, c, e, h, i) are being taken by the government and if achieved within next 6 to 18 months, can be beneficial for reducing and eliminating circular debt in 8 to 10 years.
- Nothing concrete for points (d, f, g). All are tricky ones and would be a tough nut to crack.