Structural Changes In Tariff Expected To Make Energy Expensive

Chairperson National Electric Power Regulatory Authority Tauseef H Farooqui has said that the government is vying to make hydropower projects under the umbrella of renewable energy expensive from 3.5 per cent to 30%.

Chairperson National Electric Power Regulatory Authority Tauseef H Farooqui has said that the government is vying to increase hydropower projects under the umbrella of renewable energy from 3.5 per cent to 30%.

Mr Farooqui was speaking at a webinar on ‘Impact of Covid-19 on energy sector of Pakistan: opportunities and challenges,’ organised by Sustainable Development Policy Institute (SDPI) here Wednesday.

Mr Farooqui predicted that the target is increasing the share of renewable energy in the country to 60% in the next 10 years. He briefed the participants that the pandemic affected investment in the energy sector globally from 20-30% and in renewable energy sector by 15%. He observed that there have been several challenges on the demand side as commercial activities were ceased for a while leaving a bad impact on the economy. Thus, the government provided 25% discount to the industrial sector while the small and medium enterprises was given 50% relief.

Anne Sackville-West, Economic Officer, US Embassy, informed the participants that the United States and Pakistan are working on renewable energy for the last many years besides USAID making investment in several clean energy projects recently within the country. In the context of Pakistan, she said, the structural changes are expected in tariff and thus, the energy would be getting expensive in coming days.

She further said that the price of electricity would ensure that Pakistan moves out of the current situation regarding circular debts. However, on the other hand, a lot of people are still not having access to electricity. It signifies the need of having a holistic approach and a broader stakeholder’s engagement to resolve several technical and policy level issues including the affordability and sustainability of the energy. Financial incentives are the key for market to come up with appropriate solutions. Therefore, long term integrated conversation approach is required, she added.

Khurram Lalani, the expert in energy sector, was of the view that a key learning from Covid-19 is that the scientific economic diversity should be accepted in policy-making process. In energy sector, he said, the grid modernisation framework is lacking in Pakistan. The subsidy retargeting regime need to be addressed as majority was not able to pay bill in the times of pandemic, he added.

He stressed that that the investors lose hope when it comes to tariff. Thus, a competitive market regime is required in addition to good financing and technical base for a clean, stable regime. The Covid-19 provided with an opportunity to reassess and come up with a comprehensive framework with reference to the fuel pricing and mitigating cost, he concluded.

Dr Fatima Khushnud, general manager, Engro Energy Limited, highlighted that slow economic activity was observed after Covid-19 occurrence. It is a positive sign, however, that the supplier regulation is out for the consultation process and we are moving effectively on the policy side. Therefore, a lot of market reforms are expected because of the impacts of pandemic.

She opined that many industries were now aware of the renewable energy, especially in the textile industry and steel industry and it is also moving towards green energy for a better financing. She added that we need to move towards electrification of the transport sector and better financing opportunities exist if we are inclined towards green energy.

Earlier, Dr Sajjad Amin and Dr Hina Aslam, both from SPDI, also addressed the online participants.

 

Originally Published at The International News

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