PM orders ‘drastic measures’ to reduce electricity tariffs

Prime Minister Muhammad Shehbaz Sharif chairs a high level review meeting regarding power sector in Islamabad on Monday.

Premier highlights nation imports oil worth $27 billion for power generation and transportation
Prime Minister Shehbaz Sharif urged the energy ministry to use alternative and renewable sources for power generation to decrease reliance on imported fuels.
The prime minister made these remarks during a high-level meeting on Monday. While reviewing the progress of power sector projects, the premier emphasized the nation’s considerable hydel potential and directed for a comprehensive utilization of all available resources.
He highlighted that the nation presently imports oil valued at $27 billion to fulfil its requirements for power generation and transportation, a sum that could be substantially decreased through the adoption of alternative energy sources.
“Ultimately, we have to move to renewable energy. The oil import worth billions of dollars can be controlled by using alternative resources like solar, wind and hydel. Make cold calculations and I believe, you will be the winner in the long term,” the PM remarked.
He stated that embracing renewable energy resources would help eliminate the influence of the oil tanker mafia, which he referred to as a burden on national finances.
The PM noted the prevailing nationwide rain spell as a promising advancement in augmenting water levels within rivers and reservoirs and emphasized its advantageous impact on power generation.
However, he expressed profound condolences for the loss of lives and property damages incurred due to the recent torrential rains and urged swift action from the National Disaster Management Authority (NDMA) to expedite rescue and relief efforts in affected areas.
Additionally, the PM instructed close coordination with Provincial Disaster Management Authorities (PDMA) to ensure the timely provision of essential relief supplies to affected communities.
Energy Theft
During the meeting, the premier also commended the Punjab government for its tangible efforts in combating power theft throughout the province.
He urged other provinces to also implement comprehensive measures to curb electricity theft.
The premier remarked on the deplorable state of the power distribution system and transmission lines in the country, emphasizing the urgent necessity for a comprehensive overhaul of the entire electricity infrastructure, which he mandated would require substantial investment in the sector.
He also instructed the energy ministry to enlist the services of internationally renowned consultants in the power sector to rectify the deficiencies in the power system.
A day earlier, on April 14, the World Bank agreed to provide a $1 billion loan for the 2,160 megawatts Dasu hydropower project–a crucial initiative aimed at integrating cheaper electricity into Pakistan’s energy mix and showcasing the nation’s resilience against adversaries.
Pakistan’s power sector grapples with challenges such as high electricity generation costs, over-reliance on fossil fuels, and fixed capacity payments.
Yesterday, the National Electric Power Regulatory Authority (Nepra) also revealed that the high cost of electricity was one of the contributing factors for decreasing the country’s economic growth rate to only 0.29% in the financial year 2022-23.
The situation has worsened due to the addition of large coal and imported gas power plants with take-or-pay contracts over the past decade. These plants increased capacity payments by 50% and exposed the country to international fossil fuel price volatility.
The current average cost of electricity generation in Pakistan is US cents 8.5 per unit, driven up by the average cost of thermal generation exceeding US cents 10 per unit.