NEPRA approves a 10-year capacity expansion plan

KARACHI: The Alliance for Climate Justice and Clean Energy (ACJCE) demanded that the government ensure that consumer interests, be they economic or related to public health, are factored in the government’s power policy, including, the impact of any policy on consumer end tariffs and sharing it with the public for comment and feedback. 

The comments came while the ACJCE held a press conference in Karachi to comment on the power and energy policy of the PTI government. In December last year, Prime Minister Imran Khan had announced that the country would shift to at least 60 percent renewable energy by 2020. 

The alliance includes individuals from an array of civil rights and activists groups, those present at the conference were Muhammad Ali Shah, Chairperson, Pakistan Fisherfolk Forum (PFF), Zain Moulvi, Legal and Policy Analyst at Alternative Law Collective (ALC), and Haneea Isaad, Research Associate at Rural Development Policy Institute (RDPI). 

“The government has no specific policy to make this shift to 60 percent renewable energy (RE).” said Haneea Isaad.

Replying to a question by The Correspondent, she said, “obviously it is clear that there is no such policy to convert 60 percent electricity to RE in, nor is there any consistent policy in this regard either.” 

The panellists appreciated and welcomed the government’s concern for improving the policy and institutional governance of the power sector in the country. They said this would make the power sector technically efficient, financially sustainable and responsive to the alarming needs of climate change both at national and global levels. 

“However, how well these policy and planning decisions are informed about the local realities on the ground and how far they are going in the right direction are questions that need serious thoughts and analysis,” the alliance said. 

Much of the criticism during the media talked referred to two strategic plans of the government; the Integrated Generation Capacity Enhancement Plan-2047 (IGCEP-2047) and Competitive Trading Bilateral Contract Market (CTBCM). The IGCEP-2047 is a long-term plan for enhancing electricity generation capacity based on forecasts of growing power demand till 2047 while CTBCM is a plan to set off operations of the wholesale competitive electricity market in April 2022. 

The panellists opined that end-consumers and communities pay the high price of arbitrary, opaque and exclusionary decision-making characterizing IGCEP-2047. The policy and planning decisions/targets can be realistic, well-informed and set in the right direction only if they are based on a bottom-up approach, involving broad-based consultations with all stakeholders, most importantly the communities/end-consumers, and catering to their specific needs and stakes. 

The formulation of the IGCEP-2047 by the National Transmission and Dispatch Company (NTDC) has neither consulted local communities that would be most impacted by the policy nor had taken other stakeholder into confidence. 

They claimed numerous inaccuracies and misappropriations have been reported in the IGCEP-2047 document circulated amongst the public last year. Owing to the reservations voiced by a variety of public and private stakeholders, NEPRA had directed NTDC to revise the document and share it by the end of last year. However, no move has been made by the NTDC to consult the public. 

The last version of the IGCEP-2047 was quite clear on its prioritization of economically infeasible and polluting resources such as coal and Re-gasified Liquefied Natural Gas (RLNG), while no considerations were made for the impact it could have on the basket cost of electricity tariffs for end-consumers.

They said that renewable energy options, which are far cheaper, seem to have been ignored in favour of fossil fuels without taking into account the cost of environmental externalities or the huge water requirement of these power plants. The World Bank’s report on Variable Renewable Energy (VRE) uses the same system constraints and software and proposes an entirely opposite generation mix, where added coal doesn’t even come into play until 2033. 

The panellists said the rising share of coal and the corresponding decline in renewables envisioned in the IGCEP-2047 is evidence of a systemic issue. NTDC and NEPRA simply do not have a mechanism for streamlining plans in accordance with national policies and long-term goals of sustainable development. In particular, the IGCEP-2047 violates the Alternative Renewable Energy (ARE) Policy 2019 which is an integral part of the broader National Electricity Plan (NEP) as per section 13A (2) of the NEPRA Act. 

This clause provides for “ensuring the development of a sustainable renewable energy market with a dedicated and gradually increasing share in the electricity power sector.” The same policy also explicitly clarifies that “rather than adding ARE projects just based on capacity needs, such projects shall also be solicited for the displacement of more expensive fossil energy.” Despite this very clear directive, the IGCEP-2047 increases the share of dirty coal to as high as 37 percent and plans a declining share for renewables that sinks as low as 14 percent in 2047. The end result is therefore diametrically opposite to what the policy seeks to achieve. Moreover, despite the coal moratorium announced by Prime Minister Imran Khan in December 2020, the rising share of coal power in the national energy mix under the IGCEP-2047 does not make any sense, they claimed.  

Not only is this capacity expansion plan at odds with federal priorities, but it is also internally inconsistent with the regulator’s own values and principles. The IGCEP-2047 is supposed to arrange for the most economic, competitive, and environmentally sustainable long term options for the energy mix. Instead, it has followed a costing methodology that conflicts with each of these principles. Renewables have been de-prioritized ostensibly on account of (a) their “intermittency problem,” (b) concerns with meeting capacity needs, (c) high costs, and (d) incompatibility with the national transmission system. Yet as shown by the recent World Bank report, even with the current transmission system in 2021, a 40 percent penetration of renewables would be well supported and decidedly cheaper than the alternatives. Additionally, the Alternative Renewable Energy (ARE) Policy-2019 itself proposes several solutions to the intermittency problem with numerous options on backup, storage, and hybrid renewable technologies. The high cost and intermittency excuse are therefore invalid. In addition, according to numerous studies IGCEP-2047 ends up contributing to the problem of over-capacity. Moreover, as the IGCEP is a long-term plan, its costing methodology should have been grounded in an analysis of market trends in the cost of renewables and factored in efficiency gains made by future upgrades to the transmission system and then evaluated feasibility accordingly. However, as admitted by NEPRA, NTDC has not even referred to a Transmission Expansion Plan in the IGCEP and performed none of the market analyses needed to evaluate the option of a longer-term renewables-based expansion. 

The IGCEP-2047 does not take the social and environmental price of ongoing projects of coal mining and power plants into account. Without having any land acquisition and resettlement policy in place, the forcible land acquisition for coal power projects is going on in Thar. Hundreds of families have already been displaced from their ancestral homes, villages, agricultural land, common grazing land (gowchar) in Thar Coalfield Block-I (TCB-I) and TCB-II in an arbitrary manner. 

They claimed that should be noted that the IPPs, which have signed these memorandums of understanding (MoUs), constitute a very small portion of the capacity payments. These contracts do not include a lot of the IPPs working under power policy 1994, China Pakistan Economic Corridor (CPEC), RLNG power plants, power projects under Water and Power Development Authority (Wapda) and the government-owned generation companies (GENCOs), which amount to over 75 percent of these capacity payments.

Renegotiation of IPP contracts was primarily launched to overcome the issue of excess profits reaped by the IPPs citing several calculation errors, overestimation of fuel and maintenance costs and oversights by NEPRA, yet the trillions of rupees which were cited in the matter will not be recovered in any way. Though the government has been boasting of potential savings to the tune of Rs836 billion in the long term due to the signing of these contracts, there is no indication that they will be passed on to regular consumers as well, who are being burdened with ever-increasing tariffs in the name of circular debt management.


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