ISLAMABAD: Putting upfront electricity surplus at around 3,400 megawatts, Prime Minister Shahid Khaqan Abbasi on Friday ordered gradual retirement of older power plants to check additional financial burden of a looming ‘capacity trap’.

He was presiding over a meeting to review the situation of power generation and demand-supply. The meeting concluded that up to 3,400MW electricity would be surplus over the next four months (November 2017-February 2018).

“The projected surplus for the next four months has been estimated to range between 2,400MW to 3,400MW approximately,” said an official announcement.

This apparently puts a question mark on the planning process that went into hiring additional generation capacity over the past years. This also confirmed the position taken by then Secretary Water and Power Younas Dagha and former managing director of National Transmission and Dispatch Company Dr Fiaz Chaudhry for putting cap on imported fuel based plants and warning about capacity trap, respectively. Both were subsequently removed from their positions.

A couple of mega projects were contracted on the request of a few investors and Punjab Chief Minister Shahbaz Sharif.

While a reasonable spinning reserve is a normal industry practice to meet emergency situations, it has a financial cost that goes into consumer tariff and foreign exchange burden without actually utilising that capacity.

A senior power ministry official said the government was planning for a grand ceremony to announce an end to a decade-long era of loadshedding. He said the pace of economic growth envisioned for generation capacity addition did not materialise and a number of power projects were still lined up for completion over the next 6-12 months.

He said the surplus could double in the next four months even though it would be just enough for meeting power demand in the coming summer, after leaving a minor surplus for spinning reserve. Peak cumulative demand for next year summer was estimated at 25,300MW against expected generation capacity of 27,700MW.

The official said the prime minister desired that all older plants in the public sector should be considered for conversion to imported Liquefied Natural Gas but warned that conversion of plants to LNG involved a lot of investment and the refurbished plants after 15-20 years of operational life could not be expected to be as efficient.

The prime minister was informed that the average demand for the next four months, calculated on the basis of data received from various distribution companies “stands at around 14,452MW while the average net firm generation after deducting any unforeseen outages from IPPs and Gencos would remain at 16,865MW approximately”.

Taking into account the projected figures, the prime minister directed that less-efficient power plants should be closed in a phased manner and every effort should be made to convert oil-based plants to gas in a shortest possible time in view of availability of ample gas for the power sector.

The conversion of oil-based plants to gas and maximising the efficiency of the existing power plants would not only reduce oil import bill of the country but would also ensure maximum availability of power, the prime minister observed.

PM Abbasi also directed for greater coordination between the Central Power Purchasing Agency, Private Power and Infrastructure Board and Pakistan LNG Terminals Limited for ensuring availability and maximum utilisation of gas for the power sector.

Published in Dawn, October 28th, 2017