National Electricity Policy 2020

After almost 18 months of homework and deliberation, the Power Division of the Ministry of
Energy has finally unveiled the draft of National Electricity Policy 2020 which now will be
presented to the Council of Common Interests (CCI) for its approval. A quick visit at the draft
should be sufficient to reveal that it’s tall in intent but vague, non-specific, and abstract in
content. More than anything, it lacks the substance that was essential to pull the ailing power
sector out of the present quagmire and set it on a course to financial health and vitality in the
future. Therefore, in its present form, it may not help the government in achieving its strategic
objectives for reviving the economy.

The Policy’s three overarching goals, “access to affordable electricity supplies”, “security”, and
“sustainability”, are high-sounding as well as cherished. However, they lack the specificity,
concreteness, and associated timeframes, to guide the power sector entities and their
managements downstream of the Ministry as to what they are being asked to focus on,
accomplish, and by when? The draft Policy also does not specify the metrics that will be used to
assess their success or failure on each count.

Similarly, the six guiding principles, efficiency, transparency, competition, financial viability,
indigenization, and environmental responsibility, as laid down in the draft Policy to guide the
leaders and managers in the power sector entities in their efforts to accomplish the three strategic
goals are all highly-desirable principles. However, these will be difficult to translate into
practical, concrete, and doable strategies and work-packages as the Policy does not provide any
guidance as to how these are to be operationalized and put in to practice.

Just to illustrate the above point, let’s take the three strategic goals set in the draft Policy. On
“access to affordable electricity” to consumers, what exact measure will be used to set prices of
electricity in the country to ensure that these are not above the willingness and ability of the
consumers to pay? Will it be the same for all categories of consumers or will it vary in
accordance with consumers’ contribution to national economy? What attributes will be used to
ensure the “security of supply’ to consumers? Minimizing risk to imported fuel supplies, threats
to local supply and delivery infrastructure, or both? How will be the “sustainability” of the
electricity system ensured? By minimizing adverse impacts on the local and national
environment, health and safety of the consumers and general public, or preservation of the
country’s natural resources and habitats?

The draft Policy states that none of the above three strategic goals will be subservient to the other
two and each one will be pursued independently of each other and in a balanced manner. How
will this balance is to be achieved in reality, how will their achievement measured, and how will
the implementing entities deal with a situation if accomplishing of one of these goals makes a
trade-off with the other two inevitable?

When devising policies, effort is always made to set a clear hierarchy among different policies,
from top national policies down to local ones. Similarly, efforts are also made to ensure that the
policy for a particular sector of the economy guides those in its subsectors. It’s strange that the
Ministry issued Alternative and Renewable Energy Policy (ARE Policy) first, now it has issue
this National Electricity Policy 2020, and it plans to issue a National Energy Policy soon. This is
in reverse order that was actually required.

The targets set for renewables (20% by 2025 and 30% by 2030) have no mention in the draft
Electricity Policy which stipulates that all generation and transmission projects will be developed
strictly in accordance with the Indicative Generation Capacity Expansion Plan (IGCEP) of the
National Transmission and Desptach Company (NTDC). It is not clear whether the NTDC has to
follow ARE Policy or the Electricity Policy when it comes to developing renewables in the
country.

It’s good that the draft Policy requires developing of different zones in the country for the future
renewable energy generation schemes in the country. It is critical in this regard that transmission
and distribution (T&D) networks and facilities in the country are also developed with a clear
objective to facilitating the rapid growth of renewable schemes. Without an enabling and
supportive hosting T&D infrastructure, the nation may not be able to derive the full range of
benefits that renewables are capable of providing to our economy and society.

The draft Policy also speaks of ensuring a least-cost approach to generation and T&D
development in the country. This approach is a legacy of the past from the natural monopoly
character of power supply and delivery business. With the growing popularity of small, modular,
and renewable generating technologies, electric vehicles, affordable storage technologies, and
enabling smart and intelligent grid technologies, the concept of least-cost in the electric utility
business has already run its course. Instead, our Ministry and electricity regulator should
encourage devising of imaginative, innovative, and flexible pricing schemes that the wholesale-
and retail-sellers of electricity can use to derive the most value that renewables, distributed
generation, and demand response hold for our country.

The conventional approach to evaluating the feasibility of different generation options at the
“busbar” point (the point at which a generator is connected to the grid) of these plants will not be
appropriate and fair to distributed resources and demand-oriented solutions. In the future, every
new scheme for serving the consumer demand of electricity in the country should be evaluated in
terms of the actual cost (whether it’s to be incurred or avoided; monetary as well as social and
environmental) it will impose on the country. This will ensure a level-playing field for all supply
options, conventional as well as new renewables.

In the draft Policy, the government indicates its intention to impose surcharges for certain costs
of some special development schemes by bypassing the regulator. This is not a good idea and is
tantamount to taking away the autonomy from the regulator and wrest greater control from it for
imposing charges and surcharges that the government will deem necessary. The government
must reconsider its decision. The autonomy of the regulator and its careful review and scrutiny of
all costs to be imposed on final consumers is of utmost importance to the health, viability, and
sustainability of the power sector, and, therefore, must be maintained. In fact, it should be further
enhanced.

The draft Policy specifies the role of a “Nominated Entity” in the monitoring, evaluation, and
mid-course correction of the Policy during its implementation. The Ministry should not have
kept this aspect ambiguous and should have clearly specified it to enable assessment whether this
“Nominated Entity” is adequately equipped for effectively discharging its contemplated role in
the Policy or would require improvement.
Another critical aspect that the present draft Policy leaves wanting is the institutional capacity
that will be the key to accomplishing the strategic goals established in the Policy. The
government should not expect to see its Policy succeed without ensuring that it also puts in place
the requisite leadership and managerial capacity, technical expertise, and supportive tools on
ground. This capacity will play make or break role between the success and failure in the new
Policy. As management guru, Peter Drucker had once noted, “Only three things happen naturally
in organizations: friction, confusion, and under-performance. Everything else requires
leadership”. This leadership, our government will have to provide, if it really wants its new
National Electricity Policy to succeed. ?

https://dailytimes.com.pk/558147/national-electricity-policy-2020-high-in-intent-but-low-in-
content/