Pepco admits installing inefficient and expensive rental plants

[Naveed Yaseen]

MUSHTAQ GHUMMAN
ISLAMABAD (July 03 2009): Pakistan Electric Power Company (Pepco), much maligned by the public throughout the country for long and unscheduled outages, has made a shocking revelation that the recent power crisis has compelled it to install the most inefficient and expensive rental power plants.

The entity's officials made these comments at the third consultative group meeting on energy efficiency and conservation held in a local hotel recently and attended by the officials of the Planning Commission, Asian Development Bank (ADB) and Agence Francaise De Development (AFD) and USAID.

The Dab's Country Director, in his comments, stated that improved energy efficiency represented a least-cost development strategy for Pakistan with substantial benefits to the economy. "Establishing a sustainable energy efficiency investment plan and business environment is an essential component of Pakistan's energy policy and energy security strategy," he said.

He stressed that creation of Program Management Office (PMO) related to energy efficiency and realignment of ENERCON with the Planning Commission was essential to deal with the various sectors involved, eg power, oil, gas, industries, agricultural, commercial, transport, etc, and to implement energy efficiency policy and plans in Pakistan.

Further, he said the ADB was also supporting the Energy Wing of the Planning Commission in the creation of Integrated Energy Model (IEM), which would be a major step towards catering to Pakistan's future energy needs.

ADB's consultant Hagler Bailly Pakistan gave a presentation related to the Sustainable Energy Efficiency Sector Investment Programme (SEEIP). The investment plan and roadmap aims to achieve security and affordability goals set in the medium-term development framework and the National Energy Conservation Policy of the government of Pakistan with a total investment of about 8.2 billion dollars is required over next 10 years.

The ADB's mission team leader gave a presentation related to energy efficiency sector, Multitranche Financing Facility (MFF), and said that the government had cleared the concept clearance paper, investment plan and roadmap related to energy efficiency sector in the CDWP meeting held on April 30.

He said this timely endorsement of the government on the investment plan and roadmap was a major milestone achieved, which showed the keenness and commitment of the government in the energy efficiency sector. He pointed out that the creation of PMO under the Member, Energy, at the Planning Commission and realignment of ENERCON with the Planning Commission, which would eventually become Pakistan's energy efficiency organisation, could play a vital role in future to mitigate ongoing energy crises.

He said that in the first tranche, the proposal was to distribute best quality 30 million energy saver lamps. CFL's over the next two years to domestic consumers. This programme would be implemented by the eight Discos, including Karachi Electric Supply Company (KESC) under the supervision of Pepco. This programme would have substantial energy savings, eg 1,131 MW peak load reduction and 1,757 MW avoided new generation capacity, costing 2.02 billion dollars, etc.

The Regional Director of AFD informed the meeting that their main emphasis was for clean energy in Pakistan and to reduce green house gases. They had already committed funds for the construction of small hydropower plants in Pakistan. The investment in energy efficiency sector was a major programme of the French government for Pakistan, he said.

Senior Energy Advisor of the USAID gave a presentation on their Empower Pakistan Programme and informed the meeting that they would also provide 24 million dollars as a grant to the government for the next three years related to energy efficiency sector.

She said that they were on board with the ADB, AFD, Word Bank, UNDP, UNIDO, GTZ, JICA and other donors, who were working for the betterment of Pakistan's energy sector so that duplication of efforts could be avoided. She supported the MFF investment programme of ADB and AFD and creating of PMO and realignment of ENERCON with the Planning Commission.

The Pepco representative revealed that the main issue was the timely implementation of this programme and there was a need for setting up an empowered energy efficiency institution as proposed, in an effort to achieve goals and targets. He stressed that all the appliances in future would be properly labelled under this programme and Pakistan Standards and Quality Control Authority (PSQCA) should be made responsible for implementing energy labelling of all the appliances.

He stated that due to the current energy crisis, the Pepco was now installing most inefficient and expensive rental power plants. However, by upgrading the old inefficient plants, instant power supply would be made available in the shortest possible time period.

He requested early commencement of the Prime Minister's Energy Saver Programme as it could save energy by more than 1,100 MW. The ENERCON Managing Director said that there was a political consensus on the energy efficiency sector, but a policy framework was missing, and his organisation was ready to take up the challenge of setting up an empowered institution along with the policy framework.

The PCSIR Chairman sated that there was a need to ensure that the life of energy savers be certified by the manufacturers, before procurement because it took 404 days to test their life. The HDIP Director General was of the view that effort of the ADB and AFD should be taken as a business model rather than onetime charity.

"There is an urgent need to involve the private sector, the SMEs' equity, ESCOs and create policy linkages to make these programmes affordable and implement them successful," he said. The representative of Attock Oil Refinery requested the government to invest in energy efficiency projects, which could help minimise oil imports.

Also, local electronic industries should be equipped to manufacture energy efficiency appliances and a mass scale transport system for the schools may also be planned under this programme. The representative of GTZ said that they were focusing on industries and were helping them to establish energy conservation cells.

The successful upgrades of each industry should be shared so that people could learn from the experience of each other, he added. The sources said the government had confirmed the aide memoire and established a sub-working group. For this purpose, loan negotiations between the ADB and the government would start in August 2009 and the loan was expected to be approved by September.

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