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IMPACT OF 18th AMENDMENTS ON ENERGY

SECTOR

Asad Rehman Gilani

Secretary

ENERGY DEPARTMENT

GOVERNMENT OF THE PUNJAB

29th September, 2015

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VISION

• To utilize all available sources in the province to provide affordable energy to all segments of provincial economy through increase in generation and conservation since.

• “EVERY WATT COUNTS”

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NATIONAL POWER SECTOR

Source: State of Industry Report 2014 - NEPRA

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Do-mestic

47%

Commercial7%

Indus-trial29%

Ag-ri-

cul-tural11%

Bulk & Others6%

NATIONAL POWER SECTOR

* Graph based on Pakistan Yearbook 2013-2014

POWER CONSUMPTION

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NATIONAL POWER SECTOR

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

0

10,000

20,000

30,000

40,000

DEMAND (MW) SUPPLY (MW)

Source: Private Power & Infrastructure Board – Supply & Demand Position 2020

Current national power shortage is around 5000 MW.

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Major issues of power sector

• Expensive Energy Mix – Affordability• Inefficient Generating Units• Circular Debt • Aging Transmission and Distribution

Network• Power Theft• Non-Recovery of Bills – Governance

IssuesSource; State of Industry Report 2014 - NEPRA

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SITUATION IN PUNJAB

• Contains 60% of all industry with more than 48,000 units.

• Consumes 68% of the total national power generation.

• Currently faces more than 3500 MW of shortfall.

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MANDATE

• Legislation, policy formulation and sectoral planning.

• Administration of Electricity Act.• Facilitation to private investors • Power generation development.• Close coordination with federal government and

exploring companies for OIL & GAS exploration.

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POLICY FRAMEWORK

• Federal Power Generation Policy 2002 Provides a framework for the development of power plants in public and private sector including joint venture mode.

• Federal Renewable Policy 2006 Provides framework for renewable projects.

• Punjab Power Policy 2006 (amended 2009)

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ENERGY DEPARTMENT (AFFILIATES)

ENERGY DEPARTMENT

QUAID-E-AZAM SOLAR POWER

COMPANY

PUNJAB POWER

DEVELOPMENT BOARD

PUNJAB POWER

DEVELOPMENT COMPANY LTD

PUNJAB POWER

MANAGEMENT UNIT

CENTRE FOR ENERGY

RESEARCH AND

DEVELOPMENT

CHIEF ENGINEER (POWER)

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Amendment XVIII (the Eighteenth Amendment) of the Constitution of Pakistan was made by Parliament ~ 20th May, 2010

Removal of concurrent list and inclusion of subject of electricity in Federal list which simply means that provinces are no more empowered to legislate on electricity.

Article 157(1) was partially amended by adding a proviso ~ merely reassurance that the Federal Government shall not take a decision to construct a hydro-electric power station in any province without consultation of the provincial government concerned.

Insertion of new sub-section 157(3) which provides a dispute resolution mechanism through the Council of Common Interest .

IMPACT OF 18th AMENDMENTS IN CONSTITUTION(POWER /ELECTRICITY)

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There is generally a misconception that provinces have been given more power to generate electricity whereas such powers were resting with the provinces prior to 18th amendment.

With the abolition of concurrent list and inclusion of “Electricity” in the Federal List , the provinces now lack the power to legislate on electricity which is sometimes essential to make laws/rules/regulations for implementation of the power projects

Provinces are now dependent on Federal Government to make amendments in Power Policy

Provinces are also dependent on Federal Government on issues like safety of electrical installation/system and energy conservation

IMPACT ON ELECTRICITY GENERATION

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157. Electricity: (1) The Federal Govt. may, in any Province,

construct or cause to be constructed hydroelectric or thermal

power installations or grid stations for the generation of electricity

and lay or cause to be laid inter-provincial transmission lines

provided that the Federal Government shall, prior to taking a

decision to construct or cause to be constructed, hydroelectric

Power stations in any province, shall consult the provincial

government concerned

ARTICLE 157 OF CONSTITUTION

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157 (2) The government of a province may:

a) To the extent the electricity is supplied to that province from the national grid, require supply to be made in bulk for the transmission and distribution within the province;

b) Levy tax on consumption of electricity within the province;

c) Construct power houses and grid stations and lay transmission lines for use within the province; and

d) Determine the tariff for distribution of electricity within the province;

(3) In case of any dispute between the Federal Government and a provincial Government in respect of any matter under this article, any of said governments may move the Council of Common Interests for resolution of the dispute.

ARTICLE 157 OF CONSTITUTION

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CCI has resolved the issue of interpretation of Article 157(2) of the Constitution after 18th amendment and the provinces are empowered :

• To enter into the business of bulk purchase of electricity and its distribution.

• To legislate on the subject of electricity under sub-clauses of 157(2).

• To develop any project without limitation of size through private sector or PPP mode.

• To issue LOI, LOS to private sector and enter into agreements and contracts.

Federal Government has agreed to remove any ambiguity through amendments in NEPRA Act, 1997 and Electricity Act, 1910 but still enabling laws have not been amended.

IMPACT ON ELECTRICITY GENERATION

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A new sub-section in Article 172 of the constitution, the mineral and natural resources within the province now vests “jointly and equally” in that province.

In Article 172, after clause (2) amended, the following new clause shall be inserted, namely: —

“(3)      Subject to the existing commitments and obligations, mineral oil and natural gas within the Province or the territorial waters

adjacent thereto shall vest jointly and equally in that Province and the Federal Government.”.

Enabling laws and policy to define the roles of Provincial and Federal Government have yet to be put in place

IMPACT OF 18th AMENDMENTS IN CONSTITUTION(MINERAL & NATURAL RESOURCES)

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PUNJAB GOVERNMENT INITIATIVES IN PUBLIC SECTOR

Sr. # Name of the ProjectsProjects Initiated

Capacity (MW)

1Small HPP at Marala Sialkot, Deg out fall , Chianwali and Pakpattan

4 20

22x55 MW Coal based Power Project near Industrial Estates Lahore and Faisalabad.

2 220

3Coal based Power Project near load centres in Punjab (Lahore, Sialkot, Faisalabad, Multan, (150MW Each)

4 600

4 Biomass Based Power Project at Chak Jhumra 1 20

5 Solar power project at Lal Soharna Bahawalpur 1 100

6 RLNG Project at Bhiki 1 1200

Sub Total 13 2160

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PUNJAB GOVERNMENT INITIATIVES IN PRIVATE SECTOR

Sr. # Name of the ProjectProjects Initiated

Capacity (MW)

1Small Hydropower Projects (Raw Sites)

18 257

2 Coal Based Power Projects 50 MW (Local Coal)

4 200

3Small Coal Fired Power Projects 150-220MW (Imported)

6 900

3Coal Based Power Projects (Imported)

6 5280

3  Solar Power Projects 6 1290

Sub Total 34 7927

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The dichotomy of jurisdiction to legislate and power to execute has been further enhanced by 18th amendment which is creating host of administrative and legal issues

The legal and policy issues already initiated in year 2011 needs to be settled and finalized by the Federal Government at the earliest so that the provinces may discharge their constitutional obligations.

CONCLUSION

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