The Friday Times (TFT): Why is the grid so unreliable in Pakistan?
Tauseef H. Farooqi: Pakistan's grid faces reliability challenges due to a combination of factors, including lack of planning, inadequate investment in grid infrastructure, outdated technology, procedural delays and insufficient grid management capabilities. The intermittent electricity supply from various sources compounds the problem, making grid reliability a persistent concern. That’s why country-wide blackouts have become the norm.
The Friday Times: Why is power so expensive?
Tauseef H. Farooqi: We have an inefficient generation mix, which runs two-thirds of the time on imported fossil fuels. The cost of these imports has risen because of the continuous depreciation of the rupee against the dollar. The cost of power from all the independent power producers is also contracted in dollars. The problem has been compounded by poor governance of generation, transmission, and distribution processes. Finally, rising fuel prices on world markets and financial losses arising from the power sector's ‘circular debt’ have pushed the price of electricity upwards.
The Friday Times: Why is Pakistan not harnessing the full potential of renewable energy?
Tauseef H. Farooqi: Pakistan's renewable energy potential remains largely untapped due to policy bottlenecks, lack of sector cohesion, limited access to financing for renewable projects, and challenges related to grid integration. A lack of consistent policies and incentives for renewable energy development hampers its full potential realisation. The lack of investors’ trust in the government of Pakistan’s ability to pay is also one of the biggest stumbling blocks in promoting renewable energy in Pakistan.
The Friday Times: What can be done to accelerate the adoption of solar panels by customers?
Tauseef H. Farooqi: Accelerating solar panel adoption requires simplifying administrative procedures for installation permits, offering low-interest loans, and implementing net metering policies. In addition, public awareness campaigns and partnerships with financial institutions can make solar panels more accessible to customers. NEPRA has just issued Regulations for Distributed Generation and NET Metering, which should help promote solar panel adoption. It would also help to institute the Green Buildings Code in Pakistan.
The Friday Times: Do electric cars make sense in Pakistan?
Tauseef H. Farooqi: Electric cars can be a practical choice in Pakistan, particularly in urban areas, as they offer a sustainable and cost-effective alternative to conventional vehicles. However, the expansion of charging infrastructure and the establishment of incentives for electric vehicle adoption are necessary steps to make them more feasible. During my tenure, the NEPRA introduced EV (Electric Vehicle) regulations to accelerate the adoption of EVs.
Many nations, especially the developing countries, face similar power sector difficulties, but the solutions and strategies employed depend on the local context and regulatory framework
The Friday Times: What can be done to resolve the chronic circular debt in the power sector?
Tauseef H. Farooqi: Resolving the circular debt issue demands a multifaceted approach, including improving revenue collection, revising tariff structures (efficiency and performance-based), and implementing a transparent and efficient billing system. Additionally, encouraging power sector reforms, privatisation, and fiscal discipline, and a shift from imported fuel-based generation to indigenous sources are vital to eliminating this chronic issue. One more key area is the utilisation of tax collected from the power sector bills to pay off the circular debt.
The Friday Times: What can be done to reduce the theft of power?
Tauseef H. Farooqi: To combat power theft, Pakistan should invest in technological advancements like ABC (Aerial Bundled Conductors), AMI (Advanced Metering Infrastructure), and AMR (Automatic Meter Reading), enhance the enforcement of anti-theft laws, minimise the influence of unions in DISCOs (distribution companies) and encourage community involvement in preventing theft. Public awareness campaigns about the economic and societal consequences of theft can also contribute to reducing this issue.
The Friday Times: Are these problems unique to Pakistan?
Tauseef H. Farooqi: While these challenges are not unique to Pakistan, the specific nuances and extent of the issues can vary between countries. Many nations, especially developing countries, face similar power sector difficulties, but the solutions and strategies employed depend on the local context and regulatory framework.
The Friday Times: How did you address these issues when you were the chair of NEPRA?
Tauseef H. Farooqi: During my tenure as the NEPRA Chairman, I focused on implementing more efficient regulations, improving grid management, promoting renewable energy projects, and engaging with stakeholders to address the unique challenges faced by Pakistan's power sector. The key focus areas included energy security, market transformation, asset optimisation, culture change, sector cohesion, digitalisation, knowledge sharing, inclusive development and future leaders.
“Ongoing challenges include addressing grid reliability issues, ensuring sustained renewable energy growth, eliminating circular debt, and further reducing power theft and adding renewable energy for better affordability. Long-term solutions and continued regulatory efforts are essential to overcome these persistent hurdles.”
The Friday Times: Who are the major stakeholders in Pakistan's power sector?
Tauseef H. Farooqi: These include the government, power generation and distribution companies, regulatory body (NEPRA), financial institutions, consumers, and international organisations supporting Pakistan. Of course, everyone living in Pakistan and doing business is a key stakeholder. For Pakistan, the stakes are always very high when it comes to power sector reform, as it has become a very sensitive political issue over time.
The Friday Times: What challenges did you encounter in your tenure?
Tauseef H. Farooqi: I was faced with resistance to culture change, regulatory reforms, political pressures, and financial constraints.
The Friday Times: How did you overcome these challenges?
Tauseef H. Farooqi: This involved strategic collaboration with stakeholders, transparent decision-making processes, and effective communication. Specific achievements would depend on the circumstances and initiatives undertaken. I turned NEPRA into an active and prudent regulator. I took several initiatives, including the creation of a competitive trading bilateral market, bringing about demand/supply balance through IGCEP (Indicative Generation Capacity Expansion Plan), issuing RFPs (Request for Proposals) for competitive procurement of renewable energy (to achieve a target of 30 percent renewable energy in the generation mix by 2030), negotiations with IPPs (Independent Power Producers), shift from “take or pay” to “take and pay” regime, optimising fuel mix, approving an RFP for 600 MW of solar PV (photovoltaic), and introducing competition in transmission. I also helped create CTBCM (Competitive Trading Bilateral Contracts Markets), which is the biggest opening of the wholesale power market in Pakistan. I expect this to be the real game changer for Pakistan’s power industry.
Unfortunately, the government took an awfully long time to formalise the rules for implementing CTBCM. The good news is that the rules have finally been approved and notified. Now, NEPRA is to give a final ‘Use of System Charge’ tariff and CTBCM with private sector involvement in buying and selling electricity at their own mutually agreed prices without much regulatory controls, payment issues, and any red tape.
The Friday Times: Which challenges remain to be overcome?
Tauseef H. Farooqi: Ongoing challenges include addressing grid reliability issues, ensuring sustained renewable energy growth, eliminating circular debt, and further reducing power theft and addition of renewable energy for better affordability. Long-term solutions and continued regulatory efforts are essential to overcome these persistent hurdles.