ISLAMABAD: The government seems to be getting nervous that its overemphasis on generation of additional electricity may turn the existing power crisis into a far more burdensome and multidimensional liability if it is not managed carefully and pragmatically now.

That’s apparently why Finance Minister Ishaq Dar directed the water and power ministry on Sunday to ensure recovery of electricity bills from provincial governments in 60 days, as agreed with them during a meeting of the Council of Common Interests two months ago.

Mr Dar issued the instructions at a preparatory meeting he chaired ahead of a review meeting on the subject which would be presided over by Prime Minister Nawaz Sharif on Monday (today).

According to sources, Mr Sharif has been told by some of his ‘unofficial advisers’ that his aides were overzealously pushing for new electricity generation projects which may expose the economy to unnecessary risks and lead to repetition of the 1994-like situation when the-then PPP government contracted out too much capacity.

The prime minister has been advised to scrutinise the entire infrastructure chain “realistically and pragmatically” now, instead of facing political and economic crises at a later stage, according to the sources.

Mr Sharif was told that Pakistan Railways alone would require about Rs400 billion to transport the coal required to fire coal-based projects of 5,000MW capacity in Punjab’s cities like Sahiwal, Rahimyar Khan, Jhang and Faisalabad.

The capacity of the ports also needed to be examined carefully, he was told. Then there was the question of laying of fresh transmission lines to transmit additional electricity.

Under the power policy of 1994, the PPP government contracted out capacity of more than 9,000MW even though the country needed only about 3,000MW for the next five years. The next government, led by the PML-N, tried in vain to export over 3,000MW of surplus electricity to India.

It then launched controversial investigations against independent power producers to slow down commercial operations of half the power plants and wind up others, causing irreparable damage to the investment climate.

An official told Dawn that the prime minister was expected to review the entire infrastructure chain before prioritising the upcoming and future projects in order to avoid a 1994-like situation.

He said that at their Sunday meeting the ministries of finance and water & power noted that average power shortage was about 4,000MW, as demand was 18,000MW and existing capacity 14,000MW.

The meeting observed that with power projects of 4,000-5,000MW already in the pipeline, the country would require an additional capacity of 10,000MW over the next five years based on an economic growth rate of between four and seven per cent.

It remained unclear during the meeting whether or not funds could be arranged by the government for Pakistan Railways to augment its transportation capacity from the existing 1.6 million tons of coal to 18 million tons, the official said.

Mr Dar told the meeting that investment for the projects was available as the Asian Development Bank would be financing the Jamshoro project and Exim Bank of China would fund the five coal-based power projects in Punjab. Similar funding was committed for projects at Gwadar and Port Qasim.

The minister criticised the Planning Commission for not playing a central role in planning of the power sector. He said the commission should be a focal point for coordination among various ministries to figure out if port and shipping facilities were sufficient, transportation arrangements were adequate and transmission lines were capable of handling additional electricity.

Mr Dar said the government must be realistic and pragmatic at this stage of planning and frame policies for future investment in the light of future demand.

He underlined the need to improve the energy mix to bring down the electricity price in order to facilitate the people and the industry.

He added that international investors, including the Chinese companies, were interested in financing the energy projects.

Published in Dawn, August 4th, 2014