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Energy Transition pp 611–635Cite as

Palgrave Macmillan

Consumer (Co-)Ownership in Renewables in Pakistan

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Abstract

In September 2015, the National Electric Power Regulatory Authority (NEPRA) introduced Net Metering Regulations allowing domestic, commercial, or industrial electricity consumers to install up to 1 MW capacity solar and wind power systems for personal use as well as feed them into the national grid. The government furthermore abolished the import tax duty of 32.5 per cent on solar energy equipment announced in the 2014–15 budget to incentivize consumers to install rooftop solar panels and thus acquire ownership of RE installations. Consumer (co-)ownership is not directly conceived as a policy goal except for the indirect mention in off-grid power projects to be commissioned through public sector financing and/or through community/NGO/donor participation. Participation in RE projects is possible via any available type of corporation including cooperatives, partnership, or individual business or institutional activity, similar to those in other countries. Investments in grid-connected solar collectors and PV installations on private buildings, often financed through the owners’ equity are gaining popularity. However, on-grid citizen energy or community projects open to the public are not popular yet. However, off-grid community power projects, mostly hydro, having micro/mini grids have been present in the northern areas of Pakistan for more than two decades. Most of these projects are conceived by general purpose or specialized Village Organizations (VOs) registered with any NGOs such as the Agha Khan Rural Support Program (AKRSP) and Sarhad Rural Support Program (SRSP). Although VOs and NGOs jointly finance these projects usually at 20 and 80 per cent respectively, ownership rests with communities, with the NGO being a mere facilitator to channel government and donor grants.

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Notes

  1. 1.

    Like the Transmission Line Policy 2015 or the Power Generation Policy 2015 with the latter, however, not applicable to RE projects. There are also various guidelines, directives, and procedures which are still in force and support NPP 2013 such as: 2014 Distributed Generation/net-metering rules; 2010 Guidelines for Setting-up Private Power Projects; 2005 Guidelines for Determination of Tariff for IPPs.

  2. 2.

    Prior to 1998, the Water & Power Development Authority (WAPDA) and state-owned Karachi Electricity Supply Company (KESC) owned the country’s entire power infrastructure. Since then, major reforms were introduced to attract private sector participation in energy market resulting in KESC’s privatization which is now K-Electric serving Karachi and its vicinity. WAPDA’s functions were also reorganized into 10 public sector Distribution Companies, 4 Generation Companies and the National Transmission and Distribution Company (IFC 2016).

  3. 3.

    Established as Karachi Electric Supply Corporation in 1913, K-Electric was nationalized in 1952, privatized in 2005, and ultimately taken over by The Abraaj Group, which has 66.4 per cent stake in it. K-Electric is engaged in power generation, transmission, and distribution services. In 2016, it had around 2.226 million consumers in Karachi and its surroundings. See https://www.ke.com.pk/ for more details.

  4. 4.

    These power plants are not fully operated on bagasse due to seasonal fluctuations and that for the remaining period most of these plants utilize imported coal (PPIB 2008).

  5. 5.

    Data stemming from the NEPRA (http://www.nepra.org.pk/Lic_netmetering.htm) refers to licences issued until February 1, 2018; thus, some of these projects may have yet to become operational.

  6. 6.

    Calculated from NEPRA figures: Each of the 2016’s Primary Energy Supply (74 MTOE) and Final Energy Consumption (45 MTOE) divided by 2016’s Population (176.20).

  7. 7.

    Calculated from NEPRA and HDIP figures: 2016’s Electricity Sale (81,489.75 GWh) divided by 2016’s Population (176.20).

  8. 8.

    Electricity use intensity is significantly higher in Pakistan compared to other south Asian countries primarily due to inefficient appliances and household design. It is estimated that at least 29 per cent of household electricity can be saved with minor adjustments in building design parameters (Aized et al. 2017).

  9. 9.

    In the beginning of 2017 for wind power these were set at US¢ 6.7 per kWh for 100 per cent foreign debt and 7.7 per kWh for 100 per cent local debt, respectively. Authors’ calculations and currency conversions based on information given in NEPRA notification No. NEPRA/TRF-WPT/2017/1542-1544 of January 27, 2017.

  10. 10.

    For example, northern and southern zones of solar irradiance, benchmark capacity factors, project costs, indexations with consumer price indices distinguishing between local and foreign funds, operation and maintenance, debt servicing, construction periods, insurance fee, and applicable taxes.

  11. 11.

    The tariff payable by the Distribution Company shall only be the off-peak rate of the respective consumer category of the respective month; other rates such as variable charges for peak time, fixed charges, fuel price adjustment, duties/levies are not to be paid by the Distribution Company.

  12. 12.

    Current, single-phase residential, commercial, or industrial consumers are not included and not covered in distributed regeneration or net-metering scheme.

  13. 13.

    Each NGO has its own terminology to describe a village organization. Most popular terminologies are Village Organizations (VOs), Community Organizations (COs), Village Development Organizations (VDOs) and alike. Also, see footnote 28.

  14. 14.

    For the latter two see clause (132) from part I of the second schedule of Income Tax Ordinance 2001 (Federal Board of Revenue 2011).

  15. 15.

    One of the five Pillars of Islam, Zakat is an Islamic tax levied on certain kinds of property and used for charity.

  16. 16.

    For example, AEDB is implementing the countrywide RES mapping program under the World Bank’s Energy Sector Management Assistance Program (ESMAP) to facilitate RE investments.

  17. 17.

    AKRSP operates through a two-tier system of local communities’ engagement. First-tier is a village or community-level organization separately set-up for males called a Village Organization (VO), and females called a Women Organization (WO). The second-tier organization is called Local Support Organization (LSO) which set-up through the representation of VOs and WOs in the area.

  18. 18.

    The initiative is not only contributing to the sustainable energy but also create employment for local villagers. In 2010, AKRSP Chitral office employed more than 20 people, with a further 350 people, including hydro operators and watchmen in the villages, as result of this initiative (www.ashden.org). Around 16,000 households (150,000 individuals) in 32 scattered valleys of Chitral are benefiting (www.ashden.org).

  19. 19.

    The information regarding these two cases has been obtained mostly from INTEGRATION (2014) with some minor clarifications and updates made through a telephonic interview with Mr Darjat Muhammad (Director PD) of AKRSP.

  20. 20.

    Acumen is a non-profit global venture fund for entrepreneurs who want to address, poverty, health and educational issues. For OUCL (not presented as a case study), the AKRSP has facilitated a local credit facility from Habib Bank Limited (HBL).

  21. 21.

    The AKRSP’ exit strategy is however unclear on how it will withdraw its technical support for MHPs’ O&M, accounts and financial administration issues and future expansion activities.

  22. 22.

    For example, in case of AKRSP initiated community-based PUCs, the CDM source was overestimated and that too benefited AKRSP from whatever income earned through CDM but not to the communities. See INTEGRATION (2014).

  23. 23.

    It takes months of continuous follow up even for the privileged persons to get grid connectivity for < 1 MW RES installation (Phone interview with a net-metering licence holder, dated March 1, 2018).

  24. 24.

    Phone Interview with Executive Secretary, Renewable & Alternative Energy Association of Pakistan (REAP), dated March 1, 2018.

  25. 25.

    NEPRA (2017a) suggest that many of the grid lines are overloaded. In view of the fact that most thermal installations are operating below their full capacity, this itself indicates the carrying capacity of the national grid.

  26. 26.

    See AEDB Notifications: SRO. [not numbered], dated: November 22, 2017; and, SRO [not numbered], dated: February 6, 2018.

  27. 27.

    SRSP has requested NEPRA for 2 MW hydropower generation licence from a plant located at village Birmogh Golen, Union Council Koh, District Chitral (Ref: SRSP/CEO/870 Date: August 15, 2017). The TRDP’s CEO has also registered of a utility company to provide affordable energy to remote consumers (Personal Interview with TRDP Chief Executive Officer on March 15, 2018).

  28. 28.

    During the 1960s, agricultural and non-agricultural cooperatives in Pakistan gained momentum as a result of government’s financial assistance and loans through cooperative banks.

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Authors and Affiliations

  1. Department of Public Policy, Pakistan Institute of Development Economics, Islamabad, Pakistan

    Junaid Alam Memon

  2. Department of Environmental Economics, Pakistan Institute of Development Economics, Islamabad, Pakistan

    Anwar Hussain

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  1. Junaid Alam Memon
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Correspondence to Junaid Alam Memon .

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  1. European University Viadrina, Frankfurt (Oder), Germany

    Jens Lowitzsch

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Memon, J.A., Hussain, A. (2019). Consumer (Co-)Ownership in Renewables in Pakistan. In: Lowitzsch, J. (eds) Energy Transition. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-93518-8_26

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  • DOI: https://doi.org/10.1007/978-3-319-93518-8_26

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