ISLAMABAD: After capping the upfront tariff-based renewable
energy projects, the government has constituted an inter-provincial
committee to formulate an overall National Electricity Policy and
National Electricity Plan envisaging the roadmap for future development
of electricity generation, transmission and distribution capacity and
its market structure.
A senior government official told
Dawn the committee would first formulate a national electricity policy
for approval by the Council of Common Interests (CCI). The policy would
set the direction for future electricity generation and distribution,
and creation of a market operator to enable wholesale trading of
electricity. Alongside, the committee would also develop first five-year
plan for future electricity projects in all areas with targets and
timelines and how the market be opened going forward.
The
official said Minister for Power Awais Ahmad Khan Leghari had already
issued a notification for the establishment of a nine-member committee
under Regulation of Generation, Transmission and Distribution of
Electricity Bill 2017 approved by the National Assembly. Interestingly,
the bill is yet to become a law, pending its approval by the Senate and
the President of Pakistan.
A newly inserted section
(14-A) of the said bill requires the federal government to prepare and
prescribe a national electricity policy and plan with the approval of
the CCI from time to time for the development of power markets, provided
that input and assistance from the National Electric Power Regulatory
Authority (Nepra) would also be required from the development of the
said policy.
Under the said section, the policy would
cover development of system based on optimal utilisation of resources
such as coal, natural gas, nuclear substances or materials, hydro and
renewable sources of energy and development of “efficient and liquid
market design”. It has to integrate national and provincial transmission
systems.
Interestingly, the law also required to ensure
policy for the development of a sustainable renewable energy market with
a dedicated and gradually increasing share in the power sector besides
all matters relating to reform, improvement and sustainability of the
sector.
The policy would take technical assistance from
consultants appointed by the Asian Development Bank for the draft policy
and plan. The committee will comprise a top official of the power
division, four energy secretaries of the four provinces and one
representative each from Nepra, Private Power and Infrastructure Board
(PPIB), and Alternate Energy Development Board (AEDB).
Under
the notification, all the members of the committee would personally
ensure their attendance at every meeting. The National Transmission and
Dispatch Company Limited (NTDC) and the Central Power Purchasing Agency
(CPPA) will provide technical input and support to the Committee.
The
NTDC will immediately hire and appoint an independent and professional
consulting company to provide technical support to the committee in the
development of the transmission and generation aspect of the plan.
The
draft policy to be prepared for consideration and approval of the CCI
would cover electricity generation, transmission and distribution
besides establishment of market operator, wholesale trading of
electricity and creation of retail market for electricity.
Under
this policy, the five-year electricity plan would be approved and
notified by the federal government to cover power generation, including
timeline for de-licensing generation plants, enhancement of net-metering
regime, improving the generation mix, improving pricing methods, share
of provincial generation in national grid and encourage efficiency.
The
plan would also set the tone for transition of the power market into a
competitive multi-buyer regime, improvement in settlement and clearing
function, establishment of a settlement guarantee fund, encouraging
trading of electricity on an exchange, moving away from CPPA-G as
purchasing agent of distribution companies (Discos).
It
will propose means for the development of a wholesale trading market in
electricity, including incentivising trader licences, timeline for
initiation of wholesale market and trading limits of wholesale traders.
The
plan would set targets and role of the PPIB and AEDB after
establishment of a competitive market regime and set targets and means
to develop the transmission sector on modern lines including system
improvements, timeline and manner of segregation of system operator from
NTDC, establishment of an efficient and professional system operator.
In
the distribution sector, the plan would suggest milestones and
guidelines for possible de-merger of larger Discos, investment plans to
improve efficiencies and set the role of provincial governments in
improving efficiencies, segregation of retail function in a phased
manner from Discos.
The broad outline of the policy and
plan is to create a retail power market, manner of making retail
function operative independently of Discos, incentivising trader
licences. It would also set the direction of the power sector financing
including circular debt management and reduction, securitisation of
debt, enhancement of capital market investment, financing and borrowing.
The
final draft of the National Electricity Policy shall be placed before
the CCI for its approval while the national electricity plan would be
approved by the federal government for implementation.