In a new policy, the government has decided to curtail oil consumption in electricity production and produce about 21,000 megawatts with the help of coal, gas, wind and liquefied natural gas (LNG) in an effort to achieve a better fuel mix, ease pressure on foreign currency reserves and reduce power tariffs.
“The country will gradually stop using expensive furnace oil, which will not only bring down power tariff, but will also lead to an improvement in environment,” an official stated.
Participants of a meeting of the cabinet committee on energy, held on December 29 and chaired by Prime Minister Nawaz Sharif, said a cap should be imposed on fuel oil consumption in medium- and long-term energy projects.
Planned coal-based power projects would generate 11,373 megawatts, of which 4,920MW would be produced by 2018 and 6,453MW by 2019. Gas, wind and solar-run electricity plants would add 580MW in 2015, they said.
Though LNG-based energy projects might appear expensive in the long run, they would give an advantage in terms of time, economic activity and appropriate energy mix. Therefore, the meeting participants suggested, the government should start new projects of 3,600MW, replace the more expensive fuel oil with LNG in projects of 1,000MW and plan further to switch to LNG from fuel oil for another 5,000MW power plants.
The plan will also help ease the burden of subsidy payments on the government and provide significant relief to the consumers with a decline in electricity tariffs.
Since the Musharraf government, over Rs2 trillion has been paid to the power sector on account of subsidy.
At present, the country has a poor energy mix as thermal plants account for a dominating share in electricity generation.
In November, however, oil consumption had dropped, which led to a substantial reduction of Rs2.32 per unit in electricity tariffs under the fuel price adjustment formula.
Earlier, the prime minister had directed the Ministry of Water and Power to frame proposals for restricting oil consumption in power plants in order to improve the fuel mix.
