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Managing of electricity remains embarrassing for industrial growth

Khalil Ahmed
Managing of electricity remains embarrassing for industrial growth

Whole power sector should be realigned to improve consumer tariffs and quality of service

Karachiites must be allowed to use rooftop solar and wind installations

Renewable energy is the future of Pakistan and we need to do the best

Interview with M. Shariq Vohra – President, Karachi Chamber of Commerce & Industry

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PAGE: Could you tell us about the energy issues for the industry in Karachi? 

Shariq Vohra: The most pressing issue hampering industrial growth is high cost of electricity accompanied by long hours of load shedding in the city. The issue is complex as industry has to operate without interruptions and frequent outages cause production losses. Even though power supply service to Karachi was privatized more than a decade ago to bring efficiency in the system and K-Electric did manage to reduce line losses and electricity thefts, but the industry could not enjoy its benefits in terms of cost due to unified pricing in the country. The unified electricity tariffs across Pakistan burdens the honest consumers with additional cost of line losses and electricity theft across the country, which discourages performance and efficiency. To add to woes, the industry became captive under the current electricity regime which granted exclusivity to a single company to undertake sale and distribution of electric power. Under the monopoly, the issues of over-billing, low service quality, frequent power outages due to faulty infrastructure have become common occurrences in Karachi. Hundreds of people die every year when rains hit the city and heat waves occur due to the unsafe and fragile transmission and distribution networks.

PAGE: How would you comment on the energy policy of Pakistan?

Shariq Vohra: I, being the President of KCCI, believe that the entire energy sector must be de-regulated. Currently, there are too many complexities in tariff determination, ineffective contract terms, missing legislations and weak authority of NEPRA that have made using energy a luxury. Ideally the more power a user consumes, the less price per unit he should pay, however it is the opposite in Pakistan as we charge a higher rate for increased consumption. A power utility is a strategic industry, which has profound economic as well as security implications and it should not be left to the vested interest of a monopoly, which only seeks to maximize profits rather than serve the economic interests of Pakistan. Therefore, multiple power companies should be allowed to operate in Karachi and electricity policy should be realigned to bring in healthy competition both in terms of competitive consumer tariffs and quality of service. The policy should favor having an efficient energy mix with maximum utilization of clean renewable energy sources at lowest possible cost and this benefit should be passed on the end consumers including industry.

Karachiites need to be allowed to use rooftop solar and wind installations without a threat of penalties. Obtaining of net metering licenses needs to be encouraged and simplified.

PAGE: Your views on the alternative energy:

Shariq Vohra: Renewable energy is the future and is also in line with the present government’s green policy. The incumbent government plans to increase the share of renewable energy in total power generation to 30% by 2030, through wind, solar, small hydro and biomass projects. Currently, the share of renewable energy stands at meagre 4% which is quite negligible despite the fact that the country holds huge renewable energy potential particularly wind and solar. Large hydro power projects provide around one fourth of the country’s electricity supply. Lately, technological advancement and falling costs for batteries have led to increased installation worldwide.

The major hurdle to the adoption of solar power generation system in Karachi is the high cost of batteries, which require replacement after every 2-3 years unlike solar panels, which have a lifespan of over 25 years. However, consumers can still put solar panels and run their appliances throughout the day from morning to evening on the solar directly without the need of storage in batteries. Then in the night, they can switch back to the city’s power grid. This will lead to immense cost saving for consumers.

Karachi enjoys 8-9 months of summer, which makes it ideal to install solar power system. It is high time that we start taking advantage of this resource. Germany has less than 50% of total area in comparison with Pakistan’s yet it has a capacity of more than 60,000MW of wind energy. It has 50% sunshine hours than Pakistan yet it has a capacity of more than 49,000MW solar energy as of Jan’2020. Another issue of Karachi is heaps of garbage; it can also be efficiently utilized to generate electricity. This will also help the government in its plan to save 3 million tons equivalent of oil (33,000MW) by 2025 through energy efficiency and conservation programs. National Energy Efficiency and Conservation plans to save up to 1.3 MTOE in the industrial sector by 2025 by the implementation of minimum energy performance standards.

State Bank of Pakistan (SBP) currently has financing schemes for renewable energy, however, no one knows about these schemes so large marketing campaigns are needed to make the people of Karachi aware so that they can install solar panels in houses and SMEs. Reduced energy cost will lead to cost savings covering up installments.

PAGE: Your views on energy cost for the industry?

Shariq Vohra: High energy costs along with the sector’s unreliable service in Pakistan, particularly Karachi are probably two of the most significant impediments restricting the growth of the country’s industrial sector. In Karachi, businesses have been raising their voices against the power monopoly since many years. Electricity is an essential utility for nearly all industrial sectors and high power costs make doing business more difficult in an already challenging economic environment. In the past, KCCI has termed any rise in electricity prices as “an anti-business move” because such measures add to the woes of the already crippled business and industrial sector due to various other reasons. At a time when industries are recovering from the harmful impacts of the COVID-19 pandemic, the high energy costs have subdued any chances for significant recovery any time soon. The current energy prices are also against the government’s promise of facilitating the business and industrial sector.

Furthermore, Karachi based businesses often get fresh and unexpected challenges related to the energy sector. For instance, just when COVID-19 was knocking at the nations door and businesses were preparing for a period of near zero sales, they were served with highly inflated electricity bills on account of retrospectively charged amount of Industrial Support Package Adjustment (ISPA).

High energy costs can even drive away potential foreign investment in the city which our country needs for long term development. However, when industries have such high costs to bear, their growth and development is put under a question mark.

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