Awais Ahmad Khan Leghari, the Federal Minister for Power announced that the government’s change in policy related to the awarding of contracts to renewable power generation projects and their respective firms.
He stated that after the 10th of December, the government has no reason or liability to buy electricity from renewable energy sources which usually worked on an advanced payment basis. The respective firms and sources will now have to win their contracts competitively via a bidding process. The Federal Minister for Power Division made this announcement on Wednesday,
It’s time to honour our promise of cheap electricity and now investors will be invited for competitive bidding in order to ensure the lowest rates and pass maximum benefit on to consumers.
The reason for this policy change, as stated, is that Pakistan is now generating a surplus of electric power and needs to cut down on costs. Ever since power shortage began, back in 2006, the government “bought” electricity on an upfront or a cost-plus basis in order to compensate the shortage of power and to promote newer tech under the clauses of the Renewable Energy Policy 2006.
The government had to pay power companies in advanced in order to keep them hooked, even though it was loss-making, it was vital to meet the electricity needs. Now that it is winter, and power demand is reduced, the government is backing out on renewable energy sources.
Leghari assured that the power generation capacity of Pakistan is enough to sustain the needs of the country and that there’s no need to pay more cost to external firms. He assured,
As the technology evolves and technical data is made available, it is high time that the tariff regime is changed and more competition is brought while promoting renewables in the national grid.
The Renewable Energy Policy covers several sources of energy such as wind, solar, bagasse and some small-time hydropower projects. This policy restricts the buyers to consider issues that may arise related to the wind speed or the solar energy. It also compels the affected parties to bear any risks related to hydroelectric projects.
It is highly likely that the renewable energy projects will be forced to reduce their costs in a competitive bidding system. The minister believes that this new implementation will leave a favorable effect on the country due to its lower costs and potential to end power shortage.
Within the next eight weeks, you will see competitive bidding for the award of 400MW wind and 600MW solar energy projects.
This is just the beginning and the government will introduce more such programs in coming months.
Loadshedding Has Ended
The statement of the Federal Minister for Power – which stated that Pakistan has electricity in surplus and that the loadshedding issue had ended was criticized by many who claimed to have witnessed power shortages first hand in many areas of Pakistan. The minister denied it firmly saying that the critics are merely misleading the public by spreading propaganda. He said,
I humbly stated a few days ago that loadshedding has ended. Today, I am 10 times louder with that statement and tomorrow would repeat 20 times louder that there is no more loadshedding.
Regardless of what the ministers might claim, loadshedding is a fact that’s being witnessed by a huge majority of the population. Simply hiding behind “power shortage only in heavy line loss areas” won’t satisfy the people since it’s the government’s responsibility to catch electricity thieves and fix its infrastructure to reduce line losses.