1. Khalid Saeed Head Energy Research Centre COMSATS Institute of Information Technology, Lahore Campus

2. Introduction Existing Structure of Energy Sector 2

3. Major Challenges Demand and Supply Gap: 6000-7000MW (1/3 rd of total demand) 3

4. 4 Sources: Overseas Investors Chamber of Commerce & Investments (OICCI) Pakistan, Energy Sub Committee, NEPRA’s State of Industry Report 2013 Major Challenges High cost fuel mix for power generation

5. Major Challenges 5 High cost fuel mix for power generation – Low hydel share; decrease in gas allocation for power sector

6. Major Challenges Fall in share of investments in Energy Sector: While in mid 90’s, 26% of total and 51% of public sector investments, the share of energy (including power) dropped to 4% and 26% by 2009-10. Trust Deficit – a reason for inability to undertake large hydel projects over last 25 years (except Ghazi- Barotha) 6

7. Major Challenges 7 High T & D losses and poor recoveries by DISCOs

8. 8 System Losses and Revenue Recoveries DISCO Distribution Losses Recovery (2011-12) (2011-12) PESCO 35% 68% HESCO 28% 69% SEPCO 49% 53% QESCO 21% 36% IESCO, JEPCO, FESCO, LESCO (average) 9.5%-13.5% 95%-98% Source: NEPRA: State of Industry Report: 2012 The table below indicates the level of losses and percentage of dues being recovered by various DISCOS.

9. 9 DISTRIBUTION LOSSES IN DIFFERENT COUNTRIES Country %age of output Transmission &Distribution Losses Australia 7% USA 6% Canada 8% Germany 4% France 6% UK 7% S. Korea 4% Malaysia 4% Iran 17% China 5% Egypt 11% India 24% Pakistan 20% Source: World Development Indicators Report: 2012

10. Major Challenges Unsustainable tariff regime 10

11. Major Challenges 2% loss to GDP – Impact on employment/ exports/budget deficits and circular debt 11

12. Major Challenges Degeneration/ Derating of Public Sector Gencos Uniform national tariff – No incentive for efficiency/ better recovery/ cutting theft and losses Circular Debt/ Inability to fully operate all available generation capacity due to shortage of funds to get fuel. 12

13. Road Ahead: Way Forward 1. Diversity – More reliance on renewable energy (hydel/solar/wind) 2. More gas allocation – Add coal based power generation 3. Improve efficiency of public sector Gencos – Also introduce efficiency for industrial machinery, transport and household appliances 4. Manage demand through conservation measures 13

14. Road Ahead: Way Forward (Cont.) 5.Rationalize tariff regime 6. More investments – Public and Private sector to upgrade Power sector T & D infrastructure 7. Timely payments to avoid circular debts 8. Develop political consensus on energy security issues 14

15. Road Ahead: Way Forward (Cont.) 9. Improve governance to cut theft/corruption and inefficiency 10. Improve governance at policy level inter-ministerial coordination – single Energy Ministry 15

16. Salient Features of National Power Policy 2014 To achieve the long-term vision of the power sector and overcome its challenges, following goals have been set: i. Build a power generation capacity that can meet Pakistan’s energy needs in a sustainable manner. ii. Create a culture of energy conservation and responsibility 16

17. Salient Features of National Power Policy 2014 iii. Ensure the generation of inexpensive and affordable electricity for domestic, commercial, and industrial use by using indigenous resources such as coal (Thar coal) and hydel. iv. Minimize pilferage and adulteration in fuel supply v. Promote world class efficiency in power generation vi. Create a cutting edge transmission network 17

18. Salient Features of National Power Policy 2014 vii. Minimize inefficiencies in the distribution system viii. Minimize financial losses across the system ix. Align the ministries involved in the energy sector and improve the governance of all related federal and provincial departments as well as regulators 18

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