USAID ENERGY POLICY PROGRAM MONTHLY PROGRESS REPORT MARCH 2011

The program is designed to support the Government of Pakistan (GOP) in putting more megawatts (MWs) on the grid, decreasing transmission losses, and increasing cost recovery by investing in selected energy infrastructure and supporting GOP reform efforts with technical assistance and new technology. The program's overarching policy issues are centered around the need for a new, coherent policy initiative that provides an unequivocal direction for the expansion of the power sector. The current energy crisis is attributed to a jumble of unfulfilled policies, plans, visions, speeches, conferences, and roundtables that have created serious disarray in the energy sector. The Secretary of Water and Power has emphasized that policy issues are a high priority, and Pakistan needs a new policy initiative to address the crisis. The power situation in Pakistan is becoming increasingly grim, with a shortfall of over 3,000 MW. Electricity supply varies throughout the year due to weather, the age of plants, and the availability of fuel and water. High costs and heavy dependence on fuel oil have resulted in plants being priced out of the market, leading to perilous problems throughout the country. Electricity load shedding in the summer of 2010 was as high as 5,000 MW, and the power shortage has jumped to 3,250 MW, likely to increase in the months ahead. The USAID Energy Program is supporting the Power Sector Reform Program (PSRP) and the Friends of Democratic Pakistan (FODP) efforts by embedding a team of experts at the Ministry of Water and Power. The team is working on policy, finance, communications, management, generation, transmission, distribution, and human resource management. USAID is also designing a range of policy initiatives targeted at the improvement of energy sector governance, including specific generation and transmission company improvements and broader economic initiatives. The program's policy issues include reviewing the Energy Wing of Planning Commission inputs to the 10th 5-Year Plan, reorganizing the Energy Wing of Planning Commission, developing a model based on TERI, Delhi, and addressing the gas allocation strategy of the Government of Pakistan. The gas allocation strategy is a critical issue in the energy crisis, as high import prices affect the balance of payments and scarcity has significant implications for the energy sector. The program's progress report for March 2011 highlights the administrative approvals for energy program disbursements, totaling $51,232,509.63. The report also provides an overview of the power situation in Pakistan, which is becoming increasingly grim due to a shortfall of over 3,000 MW. The USAID Energy Program is working to address the energy crisis by supporting the Power Sector Reform Program and the Friends of Democratic Pakistan efforts, and by designing a range of policy initiatives targeted at the improvement of energy sector governance.