By Opinion: Mehtab Haider
ISLAMABAD: Pakistan’s cash-bleeding power sector is grappling with multiple difficulties, heading towards total disaster. The IMF may impose stringent conditions for granting a fresh bailout package of $6 billion after passing the budget from Parliament.
Inconsistent Policies Worsen Situation
Patchwork solutions and inconsistencies in policies are aggravating the sector’s woes. The latest victim is the net metering of rooftop solar. The power sector high-ups panicked when they learned that 6000-megawatt solar panels are in the pipeline, possibly installed over the next one or two years. They worry about managing capacity repayments, projected to reach Rs 2.7 trillion in the 2024-25 budget.
Solar Net Metering Issues
Power Distribution Companies (DISCOs) complained to the Prime Minister’s Office about difficulties caused by increased net metering of solar systems. Their transmission and distribution systems face multiple problems, destroying transformers and grid stations unable to absorb increased capacity.
Seeking Assistance from China
Prime Minister Shehbaz Sharif decided to approach China for technical assistance. He raised this issue during the recent Joint Cooperation Committee (JCC) under the China-Pakistan Economic Corridor (CPEC). The goal is to ascertain the exact losses of the power sector, including the effects of solar panels on the transmission and distribution system.
Policy Changes Under Consideration
A policy of solar net metering is being considered for replacement with the gross metering system. Solar-generated units would be fed into the national grid at cheaper rates and sold back at higher rates if needed. This change would reduce the monetary benefits for residential consumers. Their generation and consumption would be captured through two different meters.
Rising Tariffs and Consumer Burden
The average base tariff stands at around Rs 30 per unit, including Rs 17 per unit idle capacity charges. After adding surcharges, fuel price adjustments, quarterly adjustments, and taxes, residential consumers face up to Rs 62 per unit of electricity cost. The IMF has asked Pakistan to raise the base tariff by up to Rs 6.91 per unit.
Capacity Repayment and Energy Costs
In the financial year 2023-24, capacity repayment consumed 71% of the power purchase price, with only 29% being energy cost. Capacity charges soared to Rs 16.22 per unit, while energy charges stood at Rs 6.73 per unit. For the fiscal year 2024-25, capacity charges are projected to rise to Rs 2.7 trillion from Rs 2.1 trillion, a one-third increase. This surge will significantly impact already burdened electricity bills.
Conclusion
With this flawed policy, voiceless consumers have no other solution but to go off-grid by installing solar panels. They must utilize power during the scorching heatwave spreading across different parts of the country.
