The government’s recent decision to abandon the previously agreed-upon proposal with the International Monetary Fund (IMF) to extend the payment of electricity bills for consumers using up to 200 units over three months has caused some controversy.
Caretaker Energy Minister Muhammad Ali, during an extensive interview with The News, defended this move by stating that the impact of the extension was minimal, and most of the outstanding bills had already been collected. He emphasized that, more importantly, starting from October, electricity bills would see a significant reduction.
The minister also discussed various power projects in the works, including a 660 MW solar project in Muzaffargarh with an 80% dollar indexation, a 330 MW imported coal-based plant in Gwadar, and the C-5 nuclear power plant with a 1,200 MW capacity. These projects are being pursued despite the country’s ongoing struggle with a capacity payment trap amounting to Rs2.2 trillion.
Regarding the solar project, Muhammad Ali explained that the government would proceed with the 660 MW project only when a competitive and reasonable price is secured. He stressed the strategic importance of the Gwadar Port project, which would require a sustainable supply of electricity and possibly utilize local Thar coal once it becomes available consistently.
In addressing the capacity payment issue, the Power Division is advocating for longer loan repayment tenures with Chinese lenders, which could help reduce the burden of capacity payments in tariffs. Additionally, efforts are underway to depoliticize the boards of directors of Distribution Companies (DISCOs) by appointing individuals with high integrity.
Minister Ali proposed that the federal government should consider relinquishing control of the electricity, oil, and gas sectors and instead focus on policymaking and regulatory oversight to protect consumers. He highlighted the potential of Advanced Metering Infrastructure (AMI) and smart meters to combat electricity theft but noted that fiscal constraints were hindering the progress of the AMI project.
In a separate development, the government is contemplating an increase in gas prices, particularly for high-end consumers using 4hm3 or more per month. This change may also affect protected consumers in lower usage categories, while unprotected consumers in various usage slabs will face price increases accordingly.
Regarding crude oil imports, Muhammad Ali mentioned ongoing talks with Russia to explore the possibility of importing more Russian crude. The government is urging domestic refineries like PARCO and NRL to participate in refining Russian oil for optimal yields.
In response to gas availability concerns in the upcoming winter season, the minister emphasized the need for long-term agreements for sustainable Re-Gasified Liquefied Natural Gas (RLNG) supplies. Plans are also underway to involve the private sector in LNG imports and to utilize the underutilized capacity of LNG terminal 2 to bolster gas availability.
In conclusion, the government is navigating various challenges in the energy sector, including electricity bill payments, capacity payments, gas pricing, crude oil imports, and LNG supplies, while pursuing strategic energy projects to address the country’s energy needs.
