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Rental Power Projects to Hike Power Rates


While the minister for water and power has once again promised of zero load shedding in the next three to six months through Rental Power Projects, The Asian Development Bank [ADB] has laid the claim bared by terming it impossible.

The ADB was tasked with third party evaluation, by the federal cabinet to examine government’s agreements for additional 2250MW capacity through 14 rental power projects [RPPs]. The Bank, according to a news reports, has debunked the RPP scheme of the government in a report submitted to the government committee by saying that the agreements had been ‘signed in haste’ and without examining in detail the fiscal and contractual obligations of the government. The Bank disagreed with the claim made by Water and Power authorities that the rental tariff will range between 13-18 cent per unit, and observed that it would actually be between 14-22 cents per unit, which will make the electricity produced by RPPs substantially more expensive than what the government has claimed.

The list of weaknesses and flaws in RPPs contracts pointed out by the Bank shows the incompetence of the relevant agencies. The contracts, according to the report, lacked sound clauses in case of non-performance by the RPPs. Stupidly it is implied that even if the contractor ran away after signing the agreement, the government would still have to pay for the capacity charges. The situation of the declining gas flows, additional fuel oil needed for the RPPs and their full capacity utilization are also the issues of uncertainty which are not addressed in the contracts. The report said that even if eight out of the total 14 RPPs are undertaken, there would be still 600MW shortage of electricity. And this too would cause about 24 per cent increase in power tariff, in addition to about 30 per cent increase in electricity rates already committed by the government with multilateral lenders under the IMF programme.

The RPPs scheme has remained a controversial matter since its introduction. The scheme has threatened the people with ever higher rates for electricity and repercussions on the overall economy have also been termed alarming. The recent report by ADB has now confirmed these apprehensions.

The crisis is real but the way out to this crisis is blurred.  The complexity of the crisis has , it seems, cornered the people into choosing between no-electricity or expensive-electricity. It is shameful that despite possessing the great energy resources we are faced with this relentless crisis. Even more awful is the fact that the government and oppositions are once again wasting the time and energy in useless discussions and such a serious problem is still unaddressed. Despite the fact that this problem has gone on for years, there is still no comprehensive strategy or a long term plan for electricity generation. The authorities are unable to lay down a solid, sensible plan for electricity production. No one knows how and when the world’s third largest reserves of coal will be utilized for energy? What are the plans for hydel-power? What about solar energy ?

When will we stand up on our own? We all must know that energy crisis is just one aspect of Pakistan’s socio-economic dependency, and it can directly worsen the magnitude of other crises, such as water or food shortage. So we come back to the same old question. Who will do something about all this. The answer seems to be clearer with every passing day.

Our own selves. The Awaam.

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