The approval by the Cabinet of the settlement agreements with eight Independent Power Producers paves the way for a reduction in tariff. The reduction is because these power purchase agreements will allow conversion from the present capacity charge model, where the IPP is paid for its capacity, as well as reimbursed for its fuel, to a produce-and-pay model, where these units will only be paid for the power they produce. The approval allows the Central Power Purchasing Authority to ask the National Electricity Power Regulatory Authority to change the tariff accordingly. This means that the government is not going for one great tariff reduction after all the negotiations are concluded, but going for piecemeal and immediate reductions as soon as the review process by the National Task Force, an ad-hoc body set up by the Energy Minister is completed.
Apart from the burden on the electorate, another consequence of the Task Force’s work has been the uncovering of much corruption in the setting up of IPPs, in the form of over-invoicing and over-pricing, among other abuses. It has been that past corruption that has allowed the revision of the agreements, presumably granting IPP officials immunity against prosecution, as well as their accomplices in the Energy Ministry. The Task Force is going on an examination of thermal plants set up by WAPDA. Perhaps similar misdeeds will be uncovered. Indeed, it is likely. Will the government deal as benignly with its own officials? Apart from the issue of accountability, the question is what to do about the loss of credibility that has occurred because of the revisions. One way out is to ensure that the country does not fall in the loadshedding trap again. That implies encouraging the solarization process, not just following in its wake.
It is time for WAPDA to think up a new business model, for the old one of centralized generation is going to disappear. There is still dispatch and transmission, but it may find this very different in a solarized environment. It has to work out how it will get the consumer to pay for sending his surplus production elsewhere, and drawing power when the panels are not producing. There are technical developments afoot that make oil-fired generation look outdated. What price ambient electricity? What about night-time solar generation? Or fusion reactors? Science fiction? Or merely ideas in which recently there have been developments?
