ISLAMABAD: Shift to renewable sources can solve the issue of energy crisis in Pakistan on a permanent basis, according to experts.
They told WealthPK that approximately only three percent of electricity was generated in the country by using renewable sources in the financial year 2021-22.
The cost of per unit electricity generated through furnace oil and high-speed diesel is Rs28.19 and Rs27.97, respectively, followed by local coal at Rs26.88, imported coal from Iran at Rs17.62, LNG at Rs16.43 and imported coal at Rs13.59 per kWh. The cheapest sources of power generation in Pakistan are indigenous gas, which can produce electricity at a rate of Rs8.38, hydro at Rs4.11 and solar at Rs8.6 per kWh.
Dr Khaqan Najeeb, former adviser to the Ministry of Finance and head of the implementation and economic reforms unit, said that Pakistan must develop its own Memorandum of Economic and Financial Policies (MEFP) to determine the energy policy of the country for the next six months.
“There is a need to stabilise the macro-economic indicators of the 24 percent Sensitive Price Indicator (SPI) besides attracting foreign investment,” he said.
Khalid Mustafa, another expert, said that tariff control was not possible as long as energy was dependent on imported fuel. Energy charges were directly linked with the household budget as a change in energy charges after 15 days affected the kitchen items. “The major reason for this issue is the human resource deficit and lack of negotiation power. Owing to shortage of human resources, Pakistan cannot preempt the situation. In order to make the energy sector more efficient, it needs to be redesigned,” he said.
Currently, a sharp increase is being witnessed in per unit electricity tariff owing to the instability in the prices of power generation sources in the international market. The price of coal has increased to $375 per tonne from $80. The rate of Brent crude oil has reached $122 per barrel while the price of liquified natural gas has also increased manifold.
Likewise, the price of gasoline in the international market has reached approximately $121 per barrel, witnessing an increase of 56.1 percent within a month. The rate of diesel has shown an increase of 82 percent and reached Rs263.31 per litre. The base tariff of electricity has increased by Rs7.9 per unit.
The circular debt of the power sector is exceeding Rs2.5 trillion besides the Rs1 billion circular debt of LNG. In order to improve the decision-making process in the country, the government needs to concentrate on the development of human resources.
The experts told WealthPK that the government should take concrete steps for investment in the renewable energy sector. The government should improve the recovery rate of the energy sector, which stands at 89 percent at present, showing a loss of approximately Rs172 billion.
–INP
