The PML(N) government had identified power tariffs as the biggest factor in fuelling inflation for he common man. When it returned to power after the February election, that was its priority. It identified the capacity payments to the IPPs as the main factor keeping tariffs up. The solution was thus apparently simple; get the IPPs to accept payment for what they produce, the so-called take-and-pay model. Not so simple, because the IPPs had made investments on the basis of getting capacity charges. That means having to go into matters like return on equity, and operation and management costs. Power Minister Awais Leghari is going through the exercise, and his latest statement is almost as if he is preparing the nation for bad news: In testimony to the Senate Standing Committee on Power on Friday, he said that major relief would not materialize soon. He virtually contradicted himself by saying that the task force he headed had completed its work, and the nation could expect to hear good news on the IPPs soon. This is a subject that he will find the nation impatient; people are deeply concerned with the exact details of the agreements with the IPPs, but with the tariff they will have to pay.
Another point on which the government not only thought it could bring about a change, but thought it had actually done, was the substitution of imported coal for firing certain generation plants, with locally mined Tharparkar coal. The government wishes to have the coal-fired Jamshoro plant convert from imported sub-bituminous coal to locally produced lignite. This would carry a double benefit, not only would it cut the cost Rs 2.50 a unit, but it would save $700 million in fuel imports. The ADB, the lead lender on the project, is putting up $900 million, which it says it will not be able to do, because of the highly polluting effect of using lignite. The government not only needs the ADB for other projects, but hopes to borrow from it for budgetary support once the IMF package goes through.
The government should by now realize that its power-sector woes are caused because the sector, understandably so, is in the hands of the fossil-fuel lobby. However, now is the time to
Realize that fossil fuels, while still important, are now to be replaced by renewables. The only thing now lacking to sweep the rug under the feet of fossil-fuel lobbyists is reliable battery storage. Till then, the government will have to do the best it can.
