The cost of solar, hydropower, wind, and coal power plants was never analyzed according to global cost rates and is one of the reasons why the price of electricity is higher in Pakistan. A high-efficiency plant utilizes less fuel, gas, coal, or oil, to produce one unit of electricity but NEPRA has continued to grant licenses to inefficient plants, resulting in massive capacity payments. It is imperative, before the IMF lends more funds, to revamp blood-sucking institutions such as NEPRA that are undermining consumer trust in the state and replace them with a few credible experts.
Pakistan is in the midst of political and economic turmoil, with record inflation, primarily due to the high cost of electricity to the extent that it is now challenging national sovereignty while simultaneously slowing down GDP to levels like never seen before. The majority of Pakistanis pay bills that are far higher than their average monthly incomes. The cost hike is entirely due to circular debt in the power sector.
In 2006, the threat of circular debt intensified the criminal oversight by the national power regulator, the National Electric Power Regulatory Authority (NEPRA). The main goal of NEPRA was to provide a steady supply of electricity at a reasonable price as well as to address other issues facing the power industry, such as system losses, growing expenses, high tariffs, and generation capacity constraints.
Regretfully, NEPRA has not only failed to accomplish its objectives but has also bankrupted the country. Pakistan was economically stable during its four major wars with India, yet NEPRA appears to be leading the country towards a financial calamity. While India had kept Pakistan united during the wars, NEPRA has now polarized the country. Where did NEPRA make a Himalayan blunder to destabilize the nation?
Below is a summary of misdoings:
In the year 2012, a roadmap was handed over to NEPRA to reduce circular debt and Transmission and Distribution (T&D) losses, now spiked to Rs 600 Bn. The T&D losses could have been reduced to half without investing a single dollar. However, almost 12 years have passed since NEPRA has failed to act on the solution and instead has shifted the burden to consumers.
Another horrendous crime was granting a license and ignoring thermal power plants with low efficiency. NEPRA was handed over the strategy to retrofit oil and gas-fired plants but paid no attention. As a result, low-efficiency gas-fired plants exacerbated the depletion of gas reserves while burdening consumers with high expenses.
To put it simply, a high-efficiency plant utilizes less fuel—gas, coal, or oil—to produce one unit of electricity but NEPRA has continued to grant licenses to less efficient plants, resulting in massive capacity payments. The cost of solar, hydropower, wind, and coal power plants was never scrutinized according to global cost rates and is one of the reasons why the cost of electricity is higher in Pakistan.
My preaching at NEPRA was always on the technical audit to know the real efficiency versus the nameplate efficiency of the power plants but the institution ignored this advice and instead allowed a utility to run a plant at only 26%, whereas power plants with more than 62% efficacy remained underutilized. If the gas had been converted to a more efficient plant, the cost of electricity would have been half. Maybe this is a global record of the inefficiency of a regulator. Furthermore, NEPRA could not carry out the IPPs’ technical and forensic audit and abandoned GENCO’s power plant retrofitting for reasons that are best known to NEPRA.
Unfortunately, establishing an institution in Pakistan always means corporate standard buildings, obtaining high salaries and benefits, posh cars, the newest laptops and cell phones, and complimentary amenities on par with those of Pakistan’s best companies. NEPRA’s best architecturally designed inspiring building in the capital, with incredible views of Murree and Margalla hills, offers a great work environment. Probably, this is not available to Nobel laureates, and in this ambient environment, NEPRA only gives the unfortunate country a recipe for disaster.
Another reason is the exploitation of the NEPRA Act, in the year FY 2022-3, where the NEPRA score was 660 meetings of hearing to legitimize their decision by sharing responsibility for misdoing but it was to no avail as it is a lucrative business that is only fetching TA/DA at the cost of poor consumers.
I kindly urge the readers to review the NEPRA annual reports, which disclose how the organization has evolved into a leisure club. The best-equipped gym and auditorium in the NEPRA building host year-round spectacular events, but customers pay heavy bills at the expense of their children’s education. Instead of focusing on the challenges when examining such gatherings, think back to the time when Rome was burning and the Roman emperor Nero was playing his flute.
Hence not only did extravagant celebrations and a lack of awareness of national assigned duties turn 250 million Pakistanis into a state of haemolacria, but the high electricity bills also led to many customers taking their own lives. NEPRA’s yearly revenue in FY 2022–2023 is Rs 3 billion, but after unrestrained spending, that amount dropped to Rs 623 million.
It may also surprise readers that NEPRA officials consistently receive the best training possible from international institutions but severely lack in commitment and devotion. Consequently, for Pakistan, NEPRA itself has proven to be a Nero.
However, the most amusing act towards the nation is the start of CSR activities deviating from the original objective for which NEPRA was created. What a surprise that the first prize awarded to the vertically integrated utility received the highest federal subsidy of Rs 169 bn. It is not a bad deal to receive such a large sum (technically unjustified) and offer a few million to NEPRA to play the fiddle.
To sum it up, the primary cause of the failure is the frequent pre-selection of NEPRA’s Chairman and members, who were never chosen based on merit. This catastrophe is also the result of government action, as evident by the NEPRA Act amendment to park retired bureaucrats. The plot to destabilize Pakistan economically, as envisioned by Dr. Bhashyam Kasturi, must be exposed and dismantled.
Moreover, to promote transparency and fairness, it is time to integrate artificial intelligence into all power regulator businesses. It is also imperative, before the IMF lends more funds, to revamp blood-sucking institutions such as NEPRA and similar enterprises that are undermining consumer trust in the state. The sky will not fall if NEPRA is shelved and superseded by a few credible experts. The Government of Pakistan has to immediately cut off this parasite’s oxygen before replicating the collapse of model USSR and Yugoslavia.
