After failing to attract enough funds from foreign donors for energy projects, the government has now diverted its focus on developing indigenous power under the National Energy Policy 2013-18.

But with the policy, announced on July 22, intended to resolve a prolonged energy crisis, new controversies have cropped up between provinces and the federation.

Projects propped up under regional energy integration — the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline and the Central Asia South Asia (CASA 1000) electricity transmission project, earlier backed by the Asian Development Bank and the World Bank, respectively — appear to have been shelved because they would run through war-hit areas of Afghanistan and Pakistan.

Meanwhile, sanctions by the United States against Iran seems to have put the Iran-Pakistan-India (IPI) gas pipeline project on the backburner. The US law — the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) — doesn’t allow other countries to do business with Iran.

Currently, there seems to be no possibility of importing electricity from India because of new skirmishes along the Line of Control. It also appears that the World Bank will take time to provide funds for the Basha dam though it has recently approved a grant for verifying the feasibility study of the dam.

In this scenario, the United States and Pakistan are engaged in a Water Working Group dialogue, under which small dams constructed with USAID assistance are expected to add 154.76 megawatts (MW) electricity a day over the next two to three years. The country itself has plans for 22 small hydropower dams.

The new policy says that the country is losing 25 to 28 per cent of its power during transmission and distribution because of obsolete infrastructure, mismanagement, adulterated fuel and pilferage.

Meanwhile, power generation from imported furnace oil costs about Rs20 per unit.The new energy policy also calls for ‘development of coastal energy corridors based upon imported coal (mixed later with local coal), rapid proliferation of coal mining all across the country, especially at Thar, and conversion of expensive RFO (residual fuel oil) based plants to coal. The proposed strategy will change the energy mix in favour of low cost sources and significantly reduce the burden of energy on the end consumer.’

The shift from imported furnace oil to coal and later to green energy is expected to save the country Rs3 billion a month, and also increase generation by as much as 500MW a day, according to the policy.

Pakistan’s energy mix now comprises 48.9 per cent natural gas, 32.1 per cent oil, 7.6 per cent coal (total fossil fuels 88 per cent), 10.6 per cent hydropower and 0.7 per cent nuclear, according to the water and power ministry.

“It’s good that the government has taken steps toward energy self-reliance after botched attempts for regional energy integration. The ambitious power plan to convert costly thermal to solar and alternative power as a solution for thousands of closed factories, educational and health institutions, can only materialise when the provinces are given ownership of the energy resources and a greater say in decision making,” said Zamir Ghumro, a political analyst.

The biggest controversy is the at-source deductions of ‘provincial’ bills from the provinces’ share in the National Finance Commission (NFC). The Council of Common Interest (CCI) approved Sindh’s demand to set up coal-powered powerhouses, but the question of at-source deduction could not be resolved. The 2006 arbitration tribunal’s decision, which rejected the federal stance on provincial bills, is yet to be implemented.

The Sindh government says that it is ready to pay bills according to the arbitration decision, and not according to the 2013 policy.

Khyber Pakhtunkhwa (KP), like Sindh, is against at-source deduction. It also wants an increase in its net hydro profits (NHP) — a fund which the federal government has created for KP for hosting the dams and generating cheap hydroelectricity.

The country now generates around 16,000MW of electricity a day, and faces a daily demand of 18,000MW for domestic, commercial and industrial use. To meet this demand, which will pass 30,000MW by 2017, the power policy proposes increasing power generation on a war-footing.

“The federal government has failed to honour its constitutional commitment to entrust the ownership of oil and gas to the CCI, a superior constitutional body. Instead, it has created ministries and appointed ministers to run these institutions and departments to the detriment of provinces, which is unconstitutional and illegal,” said Barrister Ghumro.

Punishing electricity thieves is a provincial subject. The federal government says that if power theft is stopped and tariff rationalised, provincial power bills will be automatically reduced. However, at a CCI meeting on July 23, the provinces conveyed their concerns that they would not work as Wapda’s agent and pay the price for its failure to collect outstanding dues.

At a second meeting on July 31, chaired by Prime Minister Nawaz Sharif and attended by all chief ministers, the power tariff rationalisation and integrated utility courts for punishing electricity thieves were approved.

Meanwhile, independent power producers (IPPs) say that they must be paid the exact amount that is due to them. And the payments should not be delayed owing to power sector inefficiencies and electricity theft. The government buys bulk electricity from IPPs at Rs20 per unit and sells it to consumers at cheaper rates.

The recent decision to raise power rates may help, but the picture is still not clear because of the complex issues involved in solving the energy crisis.