The government has postponed a hike in power tariffs fearing it will push people towards alternative energy resources, particularly solar energy.
Special Assistant to the Prime Minister on Power Tabish Gauhar, in a conversation with Geo’s Shahzeb Khanzada, said the PM has refused to increase power tariffs. Tabish Gohar revealed that the government has informed IMF about the implication of the tariff hike.
“We told IMF that, people will start switching to solar energy if we will keep increasing electricity tariff,” he said, adding that a hike in the electricity tariff is inevitable.
What Tabish Gauhar said is also a major concern of the power sector and oil sector. If people will start switching to solar energy en masse, it will make it impossible for the IPPs to continue operating in Pakistan. Since the power sector is heavily relying on oil, gas, and coal for production, this will impact the revenue of these sectors as well.
But as hinted by the PM’s aide, the hike in the power tariffs wasn’t postpone just to benefit the public or save the power companies, a major chunk of the government revenue comes from the power surcharges and other taxes related to the power, oil and gas sectors. Therefore, a decline in consumers would mean less money for the government.
However, in case of an increase in the use of alternative energy sources, the public will benefit to a greater extent. Not only will they be free from load-shedding, but the cost of electricity will also decline.
Capital Securities Analyst Mohammad Umair said that Pakistanis can get inexpensive electricity through solar panels after paying the initial cost. “The installation of the solar panels is expensive, but after that people only need to change batteries,” he said.
“The government had cut taxes on the import of solar panels and other accessories a few months ago,” the analyst said.
However, not everyone can take advantage of the solar facility, as small houses and flats have no roof space to fix the panels, whereas, in posh areas of Karachi, people use gas-powered generators during power outages. He further replied that if the government enhances the power rate, people will start switching over to the alternate solar panel to reduce the power utility bills.
It will cost up to Rs375,000 to install 3KW solar panels in a household that has a 1-ton air conditioner, four fans, a fridge, a TV, and four lights. This solar energy panel includes four batteries of 180-190 amperes each costing Rs20,000, a converter that costs up to Rs130,0000. However, for a 5KW load, the cost of installation can increase up to Rs600,000.
On the other hand, a household with the same number of appliances will get a Rs15,000-2000 monthly bill from the K-Electric if the power load is 5KW, while for a load of 3KW, it would be around Rs12,000.
Currently, the Alternative Energy Development Board (AEDB) is in charge of promoting renewable power sources. Its website said that the board has been tasked to “ensure 5% of total national power generation capacity to be generated through renewable energy technologies by the year 2030”.
However, most of the world is moving towards clean energy sources and Pakistan also needs to step up its efforts to do the same being a signatory of the Paris climate accord.
Meanwhile, power generation in Jan 2021 was up 3.7 per cent year-on-year (YoY), attributable to increasing demand for power due to the increased economic activity. Generation through Hydel increased 23pc YoY, followed by Residual Fuel Oil (RFO) based generation increasing 21.6pc. RLNG based generation declined by 4.3pc.
On a month-on-month (MoM) basis, generation in Jan 2021 increased by 2.5pc. Generation from Hydel decreased 40.3pc, whereas RFO-based generation surged 2.3x due to the shortfall of RLNG. Further, coal-based generation also recorded an increase of 11.4pc MoM.
Analysts said that the government to interested in providing cheap electricity to the citizens, it can install solar parks in the deserts of Sindh, Balochistan, and Punjab to generate electricity that would replace the fuel-based power production houses.