LAHORE: The Institute for Policy Reforms (IPR) has revealed in its report that the cost of electricity generated through the liquefied natural gas (LNG) will be higher than the power produced from the furnace oil.
The IPR in its fact sheet exposed that the National Electric Power Regulatory Authority (Nepra) recently determined upfront tariff based on imported 147,000 cubic feet LNG as $12 per mmbtu, which is higher than the present cost of power from furnace oil. IPR also questions the need for government to seek upfront tariff from Nepra. Upfront tariff guarantees return to investor, but do not require them to meet any efficiency or productivity criteria. The parameters for the power plant remain open. “All costs are passed through to the consumers while the power producer receives an assured return,” says the Fact Sheet.
The fact sheet said that relying on imported LNG is not different from what took place under the 1994 power policy. That policy brought about change in fuel mix from hydropower to thermal power and gave extensive comfort to the investor, it added.
The IPR estimated that about 30pc of the sector’s revenue is lost at the distribution stage. There are inefficiencies also with transmission and distribution of power. Tariff policy is skewed and circular debt uncontrollable. Almost every unit of power generated carries a subsidy. New generation also would face all of these issues and the sector would resultantly continue to under-perform.
The Fact Sheet opines that reducing the suffering of the people and stimulating economy must be at the heart of any new initiative by the government. It counsels government to set the power sector house in order. For immediate relief to the people, it must increase allocation of domestic gas for power production. This will reduce cost and increase generation by bringing in capacity that cannot operate presently for want of gas. Government must take administrative measures to reduce Disco losses. At the same time, it is necessary to look holistically at the power sector and reform the flawed policy, the crumbling structure, and broken governance. Increased power at high cost from imported LNG should not be its priority, the IPR report concluded.
