Flexible payment plans for improved access to off-grid energy in Pakistan

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By Jacopo Bonan, Giovanna d’Adda, Mahreen Mahmud, Massimo Tavoni and Farah Said

There are approximately 144 million individuals in Pakistan who reside in either completely off-grid areas – areas that are too far away to connect to the grid – or in ‘bad’-grid areas where load shedding exceeds 12 hours per day (IFC, 2015). Households and businesses in off-grid and bad-grid areas spend an average of 14% of their monthly disposable income on kerosene oil, candles, and others alternative sources of energy.

Access to renewable energy

Recent evidence from Rwanda and Bangladesh has shown small, solar-powered kits can have significant positive effects on household welfare and energy expenditures. Pakistan is relatively well endowed with renewable energy sources; yet access to clean, renewable energy is rare. For instance, solar energy is consumed by approximately 3.8% of households nationwide and is nearly non-existent in Punjab, Sindh and Balochistan.
According to the IFC report, cost remains one of the biggest barriers in the take-up of alternative energy sources, such as solar electricity, in Pakistan. Consumers prefer to make small, incremental purchases to meet their energy needs and are reluctant to make large upfront investments, such as those typically required for solar systems.

Pay-as-you-go energy solutions

One energy provider in rural Sindh, EcoEnergy (EE), aims to meet these needs by providing Pay-As-You-Go (PAYG) solar solutions, allowing individuals to pay only for what they need and can afford. Monthly payments are typically comparable to what villagers spend on energy. The PAYG product has a strong enforcement feature: The solar kit is remotely disconnected when credit expires. Since there are no financial penalties for late payments, disconnections represent a pure loss for the provider.

The study: Behavioural innovations to improve the sustainability of PAYG solutions

We first test if increasing the flexibility afforded by PAYG leads to improved payment performance. We do this by varying whether payment is explained as a minimum monthly amount or as an equivalent total amount that can be paid more frequently: Weekly, bi-weekly, or at other frequencies for the solar kit to remain functional.
Second, we test the individual constraints to repayment such as inattention, forgetfulness, and lack of self-control. We use another soft-touch intervention similar to the ones that were effective in improving medical screening rates and voter turnout in the United States (US). Specifically, we ask customers to formulate a plan for the subsequent payments and to circle the payment dates on a calendar that can be displayed at the clients’ home or place of work. In formulating this plan, clients need to think about possible issues in repayment and the strategies to overcome them.

Our study involved randomly varying the terms of the product to 727 new EE clients in rural Sindh between March and December 2018. Nearly a quarter of the sample had no access to electric power. The remaining had access but experienced more than ten hours of load-shedding a day. An average customer experienced approximately five instances of inactivity (disconnection) in this period, with each instance lasting an average of five days a month.

Results: The benefits of flexibility and payment implementation plans

We find that providing information on flexible payment options to this sample improved repayment behaviour: Clients are likely to pay on time and experience one fewer instance of inactivity. On the other hand, implementation plans do not improve repayment behaviour on average (see figure 1).

Figure 1 – The number of inactive periods experienced by intervention type

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These overall results mask interesting variation. Consistent with the fact that almost 40% of the sample believes forgetfulness is the main challenge to timely payments, we find that the implementation plans significantly reduce the number of inactive periods in the sub-sample of clients who reported difficulty in remembering to make payments on time. It is entirely likely that intention plans increase saliency of payments by enabling clients, who typically face difficulty in remembering to pay, to operationalise their intentions to make top-up payments on time (see Figure 2).

Figure 2 – The number of inactive periods experienced by individual characteristics (with intention plans)

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In line with this reasoning, clients with a history of missing other payments experience a higher number of inactive cycles under the flexible payment treatment than under the discipline of a fixed contract treatment (see Figure 3).

Figure 3 – The number of inactive periods experienced by individual characteristics (with payment type)

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Implications: Innovating for improved energy access

These results speak to an important, broader question in the literature on optimal contract design in developing countries and the need to pay attention to the characteristics of people when designing them. The interventions tested in this study are soft-touch and non-intrusive in that they make a desired payment schedule salient but non-binding. However, our findings point towards the promising role that these easily scalable behavioural interventions can play in improving the repayment performance of clients with particular characteristics.

The authors are IGC Researchers.

6 comments

  1. You are missing “The Corona Bonanza”

    Bonanza 1

    There will a temporary shock to the government fiscal revenues as Imports will crash,CIF rates of imports will also crash,domestic production has stopped (as tax on MRP less deductions is paid at the time of production and not sale),domestic MRP rates will also crash.That is Y the state has not passed the benefits of lower crude and palm rates to the people

    The Bonus is in non-salary expenditures of the state,which are on ARC (Annual Rate Contracts) or other RC.With crash in commodities and surplus capacities – Pakistan can easily make and re-negotiate its procurements.Large nations like Hindoosthan,will face disaster,as they will face supply risks,per se.W.r.t the purchases by the Pakistani state,the state can declare Force Majeure,especially on International contracts.

    There is no immorality in this,as the suuply and value chain of the suupliers to the state – will,in any case,declare Force Majeure – which will ensure that the suupliers will default on the government contracts.The supliers will make supplies at ARCs,only to the extent of the existing stocks,as at March 15th,2020.They cannot be allowed to supply,from new purchases at the old ARC rates.

    Global suppliers will be glad to dump their stocks – with depots in Pakistan – for sale to the Pakistani State.

    This could easily reduce the costs by 30-50%,on a one time and recurring basis.Once this Cost is saved,in phases,the benefit of oil price crash on fuels and edible oils and also power tarriffs and fertilisers,can be passed on to the public.That will be pure jannat.

    Bonanza 2

    The Only Solution to the supply chain risk in USA/EU (w.r.t their supply chains in PTRC) lies in massive robotics and AI – which will make humans obsolete in manufactuirng and also,in part,in IT.The question is,what to do with the humans.That is Y the virus is sought – Simple !

    For Pakistan – the crash in Raw Materials and cost of capital, availability of capital and crash in logistics costs will make manufacturing and exports viable.That makes existing unviable manufacturing units viable and jobs and decline in NPAs.No fresh capacities should be launched,solely based on the current cost structure.Crash in costs plus the low labour costs in Pakistan and stable PKR – is the Alt-AI and Robotics

    The Pakistani people should thank its prior leaders,that they made manufacturing unviable in Pakistan,and made it a trading nation. Had the state set up manufacturing units – they would be unviable,banks would be busted and there would have been mass skilled unemployment. Just look at Hindoosthan. dindooohindoo

    This is the time for setting up manufacturing units – SME and others.

    The military,food,telecom,technology and health secuirty of the USA and EU is in the hands of the PRC.These nations will be FORCED to move at least 10-20% of their supply chain,to other nations.They have no choice.

    Bonanza 3

    The SBP and the treasury of the private sector,should suck in the Corona rate cuts and packages in EU/Nippon/North East Asia and the USA – and restructure the entire FX loan portfolio,w.r.t tenor,spreads,risk premiums,swaps and hedges. One simple way,is by trade finance,which is based on underlying trade and other activties with those nations.

    Bonanza 4

    After doing 3 and 4 above,the state should invite bids to build and repair infrastructure on BOOT basis.The Cost of infra should reduce by at least 30%,supplemented with long term soft loans and grants.

    With viable manufacturing and exports,lower cost of debt – an already cheaper infra cost – will make infra financing and operations,all the more viable

    Bonanza 5

    To lock in the gains to the people and industry,the SBP and the State should lock in to NYMEX crude and futures,at current rates (on CBOT or with large funds etc.) – for as long as possible,with reasonable contangos or maximum backwardation.A large nation cannot do this – as it will move the premiums,in the derivatives market.

    The State should thereafter, lock in the oil and gas rates – and then affix power and fertilisr tarriffs, for the same tenor – with a priority for industrial zones – after meeting the consumer needs.Edible oil contracts can also be struck with large funds,in the USA/EU.

    This is also the time for the state to declare Force Majeuer on the ulra high cost RPP/IPPs.With reduced power demand,the entire power demand of Pakistan, can be met from fuel and coal plants,at less than half of the previous marginal cost. For several people, this power supply can be free of cost,as the Marginal cost of power on current fuel costs,should be around 1-2 Rupees (which is not worth collecting from marginal users).

    It is time to celebrate !

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  2. The Solution to the Pakistani Power Imbroglio – Part 1

    Doom No.1

    IPP/RPP Power APM, is at 12-16% in USD – which,in effect,affixes the power tarriff in USD,for sale by the IPP/RPP,to the TransCo,at a certain PLF,with passthrough of fuel,taxes and capacities,in a tolerance band,with bonus/incentives and penalties.

    Solution No.1 to Doom No.1

    The rationale for the USD – APM , is that the investors could have invested,in thermal loads – base and peak,in the USA and EU,and would have earned a return in USD .That is bull,as power plants based on coal,are banned in the EU, and even for liquid fuel,and gas plants – the “effective” return,is subject to market risk – and the minimum return, is way below,what Pakistan offers.dindooohindoo

    It is assumed that the APM,is subject to tax/WHT etc.,subject to sectoral holidays.In other words,over the life of the project – it should not be that the APM in USD,is tax free,at point of profit,or at the point of repatriation.That would be a disaster,as the US/EU conventional power sectors,have no absolute tax waiver.

    So the Dollar peg,has to reduce.In addition,the RPP and IPP cannot have the same APM rates ,in USD,for the same or different fuel,at the same or co-terminus times – as the RPP has a practical and technical exit option,from the PPA and the Pakistani nation.

    Solution No.2 to Doom No.1

    However,the IPP/RPP will state that they have factored Country and Grid Risk,in the APM. The Risk premiums on soverign paper,and semi-soverign paper of Pakistan,is known,and the co-terminus, risk premium is traded and known,on several Risk Exchanges all over the world.

    So the APM has to be the minimum assured yield,on thermal power plants,for base load and peak load,in USD,in the USA/EU, PLUS,the risk premium for Pakistan

    The soverign debt of SBP,in USD,net of US G-sec yields,for co-terminus tenor,is the country risk for Pakistan,in BPs.The Risk Premium loaded by the IPP/RPP,cannot exceed this BP spread.

    Solution No.3 to Doom No.1

    Unilever has invested in Pakistan – w/o an APM in PKR or USD.People can live w/o food for 3-5 days,but not w/o power.However, Unilever has an effective ROE of 30-50%,which cannot be given to a power plant.Also,Unilever has no soverign exposure, or guarantee,from the Pakistani Government.

    Therefore,at a USD-APM,of 12-16%,after,say 6 years,when the entire equity is recovered,then either the APM is to be in PKR,or the USD-APM in USD has to be halved – as there is no empirical credit default,and the USD equity is recovered from the project.

    Solution No.4 to Doom No.1

    Even assuming an APM at 12-16%,in USD,the Risk premium,has to be on a floater mode,and cannot be fixed throughout the PPA tenor.The difference can be adjusted,in the 1st quarter, of a FY,for the previous FY,based on monthly or weekly averages,of the risk spreads , converted into Basis Points.Risk premiums,per se, and Country Risk premiums change over time – and an IPP,cannot claim a valid bet,on implicit soverign risk.

    Solution No.5 to Doom No.1

    If all the above solutions,were not thought of,at the stage of the MOU/PPA, AND it was on account of coercion,corruption and /or fraud – then the PPA and MOU,is void ab initio.

    Basically,the minutes of meetings by bureaucrats,will prove the fraud.In any case,any fundamental vulnerability or inequality or inequity or foolishness, in any contract,is a sign of fraud and coercion.

    Power Demand will crasH, during and post COVID.

    CPEC will have its own Gwadar based CPP.A SEZ needs CPP, as a pre-requisite – and the PRC,will not buy power from the IPP/RPP – but they may buy,from the state grid – but only,at levelised rates.

    IN ANY CASE,COVID is MORE THAN a Force Majeure event,as a Force Majeure event – after it occurs – has an ending and a quantification.For COVID,there will be NO CURE,and there MAY BE a vaccine – but only,after a long time.Hence,power demand,will disappear – and that is the basic premise,of a power project.Hence the IPP/RPP,have to re-negotiate,or exit and go,to the Hague.

    Several nations will terminate PPAs and Fertiliser plants, on APM and Capacity charges – as even if a vaccine comes,BILLIONS will NOT Take the shot.

    Doom No.2

    In nations like Pakistan – IPPs use multi-fuel power plants,and bill the grid, for fuels which they do not have,or which do not exist,in that specification.So a liquid fuel RPP,on a ship,or an IPP on land – can use several types of liquid fuel.So they have paper and tank stocks of various fuels – whose ACTUAL stocks,are NEVER checked by the state – and the clown auditors,do not have the technical skill,to check the stocks,from several angles.In addition,the shipping documents,and the ship draft and tank meters,and dips etc.,are all fudged,within a tolerance limit.

    So,in a compromised or inept systen,WITHIN A CERTAIN LIMIT, the IPP can bill for expensive fuel,which it did not have,or claim that the demurrages were paid,as the tanks were full,as the state did not have facilities,for power evacuation etc.Even a coal based Power plant,at a point in time,will have several grades of coal,in different storage conditions,and of different specifications.

    Solution to Doom No.2

    INTENSIVE,SYSTEMIC,ONLINE,TECHNICAL – BUT NON INTRUSIVE PHYSICAL VERIFICATION OF STOCKS,and the entire supply chain,from load port of fuel port to discharge port,evacuation to port tanks,port tanks to IPP/RPP tanks,meters,pressure and temperature gauges,sludge tanks etc.

    Doom No.3

    The FX loss on IPP/RPP PPA.The concept of keeping the FX position,on the IPP/RPP unhedged,especially since the SBP,in effect,affixes the PKR float – with no NDF trades – makes no sense at all.It is assumed that the IPP/RPP.,do not get the USD index gains on the retained earnings,at all – as the IPP/RPP,should have the dollar index frozen,on the date of the retained earning (which would be,the end of the FY)

    If the PKR declined by 100$,in say 4 years,then the USD-APM of 16% or 12%,is 32& or 24%,in PKR

    If the world economy is doomed,PKR exports will fall,manufacturing and power demand will crash,PKR will crash and THE CAPACITY CHARGE IN USD will be paid to IPP/RPP – which is a dead loss to the state.At the minimum,the state can hedge the USD Risk – as Imran Khan cannot revive the world economy.

    Solution to Doom No.3

    The Pakistan state has to HEDGE THE ROE-APM in USD,as the SBP knows the daily IBR,in the morning and the evening – before the sun rises,and before the sun sets.Irrespective of the nature of the project (BOO/BOOT etc.),the IPP has to forfeit the power plant salvage and sale value,at any stage of the project,except when the state is in default.

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  3. The Solution to the Pakistani Power Imbroglio – Part 2

    The Sugar-Power Paradox

    Pakistan sugar mills,make sugar,at say,a Total Cost,of Rs 60/kg,sell it,at Rs 65/kg,when the import price (duty free) would be,say Rs 30/kg.In addition,the stocks of sugar,liened to the banks,are liquidated by exports,by selling the sugar,in the export markets,at Rs 30/kg. Hence, the sugar mills are paid Rs 30/kg,as subsidy.dindooohindoo

    However,it must be noted that subsidy of Rs 30/kg,or the higher sugar price,paid by Pakistanis, HAS BEEN PAID,IN A SIGNIFICANT PART,BY THE SUGAR MILLS,to the farmers,the state (as taxes),and to the bank (as interest).The nation has received stocks of sugar, produced a strategic input,and kept millions employed and nutritious – in lieu of the subsidy,and import proection.

    Therefore,the SUBISDY ON SUGAR,is not the same,as the CAPACITY CHARGE,paid to IPP/ RPPs.The State receives nothing,in lieu of the capacity charge,as,in theory, no power is produced by the IPP/RPP,at all.

    Doom No.1 – Capacity Charges,in a No-Power scenario

    The Capacity Charge paid to IPP/RPPs – which is a dead loss,to the state – as the IPP/RPP,will repatriate the money,to the overseas principals.The Capacity Charge is paid,irrespective of power demand, evacuation issues and Force Majeure events,and also,new power corridors and West and Central Asia.The capacity charge,is also paid,notwithstanding,peak and base load power plants.

    Solution No.1 to Doom No.1

    The State has to terminate the capacity charge agreements,due to the COVID Force Majeure,as this event will destroy power demand for ever,as also change the power corridors in West and Central Asia.COVID was planned to ensure financial forfeitures and preclosures. There is no DESTRUCTION OF INDUSTRY – DUE to fire,or an accicent – and so,there is no loss to insurers.The Millions,who will die of COVID,would have died in any case,it is,thus a timing loss – and there is no investment loss,to the insurers,as the claims will be paid, from the sharp rise,in new premiums (by new scared and panicked and hapless sentients).There is no “Loss of Business” Insurance Policy,in vogue – as it is expensive,and a compendium of sophistry.

    When insurers do not LOSE,due to a disaster – they gain exponentially – as everyone will insure,for the unknown – especially,”loss of business” policies – which are LOP (Loss of Profit Policies – and very expensive).This is a sure sign,of a man made virus – with a financial, economic,military and political objective.

    This is the right time,to 1st kick out the RPPs – as they can physically exit,at will – with a few contingencies.Then the IPPs,have to forfeit the capacity charges – for those projects,where APM in USD,has already recouped the EQUITY,of the project cost.The IPP/RPPs have to partake in the realties of the energy paradign,in light of the Force Majeuere world.Even the Hague will accept this logic – as the continued operations – will be a prime case,of
    rapacious profiteering.Capacity charges have to be forfieted,by all the IPPs,with USD-APM,and,for others,the capacity charges have to be drastically cut down,AND,if needed,the liquid fuelpower sector,can be nationalised.

    Nationalisation will have no impact on FDI etc.,as the prime investor is PRC – which will,thus, not bother about the implications of PPA termination,or Power plants takeover. In a world of economic ruin,the PRC is sitting on 3-4 Trilion USD,of US-DEBT and Gold.

    Solution No.2 to Doom No.1

    The Capacity charges have to be re-negotiated – on purely technical reasons.The engineering and maintenance supply chain,of power plants,will be destroyed – as the suppliers will be busted,and those in operation,will have shortages of staff and inputs.Thus,the IPPs will ultimately default,on their capacity commitments.If the IPP can claim Force Majeure,w.r.t their engineering supply chain,the State,can also invoke Force Majeure,on their commitments,to profiteering clauses,in the PPA.

    Besides,with the crash in power demand, the technical life of the power plants will increase, as there will be,less usage,and depreciation and damage.Due to the disaster in the power sector,there will be less R&D,and so,lesser risk of technical or technology obsolescence.

    In view of the above,the capacity charges have to be drastically reduced,and/or forfeited

    Solution No.3 to Doom No.1

    In the COVID scenario, and in view of the above, the high marginal cost IPP/RPP and SOE,and also,old power plants – whose engineering supply chain will collapse – can be shut down,and kicked out – and the resultant cost saved – even on,revised power demand estimates,can be shared with the residual IPPs,in terms of higher power tarriffs (in lieu of elimination of capacity charges,PPA restructuring and eradication of high cost power plants)

    It might also be noted that,with the crash in power demand,and possibly agri activities, the hydel power plants of Pakistan,might be able to take over the peak load power demand – and so,gas-combined cycle-liquid fuel-naptha based plants – MIGHT not be required – and,if required,will need to be negotiated,in light,of the new environment.

    Thus,in addition, there can be no basis,for payment of capacity charges,for peak load IPP/RPPs,as,in the new power demand matrix – there may be no peak demand, and the peak demand,may be met,by hydro power plants.In any case,in a free market,for peak load power,or a supplier’s market, there is no case for capacity charges,in a nation,like Pakistah – as there was,in the past,enough residential and industrial peak demand,and grid disasters – with ample scope for the IPP,to make exorbitant profits

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  4. The Solution to the Pakistani Power Imbroglio – Part 3

    Doom No.1 – Capacity Charge with no Power

    Solution No.1 to Doom No.1 – If the IPP/RPPs cannot be kicked out,the capaciy charges cannot be renegotiated,the technical life of the power asset cannot be agreed to be extended,or the capacity charges cannot be waived – then it is best,to avail of the power supply,with the incremental Marginal Cost of Power,from the said IPP,if no other power supply is available, or if the Opportunity Cost of Power,from other sources,is higher than the Marginal Cost of Power,from the said IPP..dindooohindoo

    The power supply so made,at a certain tarriff to the grid,and at a certain economic cost to the state – has to be recovered by any mode,even at cost – from any activity,which ideally exports power (power intensive products – ferro alloys,metals),or which leads to any economic activity,which recovers,at the minimum,the total cost of that activity (which will include the billable value of the power,at the distribution load point)

    The VAT and Non-VAT taxes, which accrue to the state,as a result of the said economic activity,across the supply and value chain – arising out of the economic activity, is an added bonus to the state (besides the taxes on the employment derived therefrom)

    On a cash flow perspective,the taxes on the economic activity derived,from the power produced,will pay for the Marginal Cost of the Power,from the IPP (beyond the capacity charge),with some timing mismatches.

    Solution No.2 to Doom No.1 – If the T&D losses in Pakistan are 20-30%, the strategy of maximising the power output and feeding into the grid among millions of users and SMEs – has the incidental T&D loss – as,on a Marginal basis,on certain Grid-Trans lines, the entire Marginal Power produced,may be stolen (not paid for).

    Hence,the IPPs have to be forced to make a JV,for Ferro Alloys manufacture or other value added activities (using power) to evacuate the power,and ensure that the cost of the power,billed by the IPP to the Grid,is recovered – by the said activity.In such a case, the power will be wheeled through the grid,at say 2-3% wheeling charge, and used by the manufacturing unit,near the port (if the output is to be exported).If the unit is given free land ,at cost water,Nil VAT, and a limited tax holiday, and at Cost-Power,then,even if the current scenario,several JV partners,will be available.

    The Limited Profit tax,on the said manufacturing unit,and the WHT and DDT on profit distributed,will MORE than,cover the cost of the power to the grid – and the state,will be a JV partner,in lieu of the free land – and if required,in lieu of free power – which will be offset,by the dividends to the state (on the JV stake)

    As a generic law,any nation like Pakistan,with surplus PLF of thermal Power plants (not Hydel power),and for the state owned power plants, the aim should to be to hit the maximum PLF, and dispose the Marginal Cost of Power Produced, at the highest possible rate – in terms of economic activity.Even if 200 million Pakistanis,increase their use of e-appliances (24×7),the sale and purchase of the e-appliances,and the services on the e-appliances,has an extensive multiplier effect and impact on supply and value chain – and the taxes thereon,will more than offset,the Marginal Cost of Power produced

    If peak load power tarriffs can be reduced,and the peak load supply increased,to increase the absolute profit to the grid – the downstream economic gains,to power users,will be incalculabe.

    The increased load on the power plants – has no economic risk – as in the future, there will be an abundance of power corridors in West and Central Asia and PRC – bypassing Afghanistan.The Marginal cost of thermal power,is w/o considering the losses on account of spinning/reactive power,of renewables and hydel power plants.Post Aramco in Pakistan,there will be no need for these IPP/RPPs – so power generation at the cheapest cost – will not be a bottleneck,for planning or economic activity.

    Solution No.3 to Doom No.1 – If the Marginal Cost of Govtt Power plants,is higher than the Marginal Cost (beyond the capacity charge) of the IPP,then it is obviously better to use the power from the IPP,in lieu of the Govtt Power plants – and thus,pay no capacity charge.If the scenario,is in the opposite,then one should ask – why an IPP is required,if the state owned power,has a lower marginal cost (except when the power supply is limited,or not reliable.or the power plant is too old)

    Solution No.4 to Doom No.1 – If the above options are not feasible in the interim,then,in any case,the state should use hydel punped storage plants – to ensure that the Marginal Cost of power from the IPP (w.r.t the alternative to pay the capacity charge),can be consumed via the pumped storage plants,to generate and store,peak load power.In any case,the excess PLF of the state owned power plants,can also be used for the same,when the Marginal cost of the power is low – and the economics of the said pumped storage,is viable.

    Solution No.5 to Doom No.1 – Pakistan has to shift to N-Power, for base load power plants.The Japanese and the PRC,give N-power plants,on 40-50 year payment terms,at low prices – and the decommissioning costs,are after 40 years.The economic cost of the uranium is negligible,as the DU has several military applications,in armour and anti-tank missiles etc.There is also,no dearth of enrichment facilities in Pakistan.Even in the event of sanctions,some HEU-235,could be obtained from PRC,for downblending.Hence,there is no fuel supply risk, no logistics risk,and no manpower supply risk.

    In addition,the Japanese and PRC,provide the plants at zero interest rates, and also,have provisions for supply of LEU-235-5%.If by the grace of Allah,Hindoosthan is destroyed,then Pakistan will have enough HEU,to downblend and generate power,till the Mahdi arrives on earth.

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  5. The Solution to the Pakistani Power Imbroglio – Part 4

    Doom No.1 – Pakistan has failed to avail of the perks of the doom of the IPP/RPP scam

    Solution No.1 to Doom No.1 – The doom of the IPP/RPP,have not been encashed by the Pakistani state.The COVID is a divine opportunity.Besides the case for a debt waiver,seizure of power assets,making IPP/RPPs forfeit clauses of the PPA ,setting up Saudia refineries and power plants – the key opportunity, is to justify the thrust,into N-Power.

    This is the best time to strike a deal for N-Power – with the disaster in the world economy,on account of COVID.The benefits are strategic – besides the obvious financial and economic advantages to the state.dindooohindoo

    The Solution to the Pakistani Power Imbroglio – Part 5

    Doom No.1 – Liquid fuel and coal based power plants,for base and peak load power – instead of N-Power

    Solution No.1 to Doom No.1 – Pakistan has to sift to N-Power,as it is the cheapeast and low to Nil risk option,from all angles.The only contingency,is the “water quotient”,as in Fukushima – the water from the sea,and the need of the water,as a coolant,moderator and conductor.Unless Afghanistan is partitioned,no energy corridor passing through it,will be bankable or insurable,or risk free.Similarly, no energy corridor through Iran,will be unviable (from the point of UN Sanctions/ Trade sanctions/geo and financial risk).

    When Oil prices are at 20 USD – there is demand destruction, and so,power availability and fuel availability,is not an issue,as there is no power demand – and
    the state has to pay the capacity charges to IPP/RPPs.At high oil prices,IPP/RPP power costs are high,even if the power demand is muted (as the oil price,prices in political/geo/logistics risks – and not an uptick in demand or economic activity),and even,if the power demand is high – there is no international competitiveness,w.r.t the exports,as other nations,have lower power costs and export sops.

    Further,in the event of any Conflict in the Persian Gulf,which is certain,in a block of,say 3-5 years,there is a supply risk,w.r.t fuel logistics,to Pakistani ports, and especially,the liquid fuel cargos – besides the risk premium,in the fuel prices,and the sea freight and insurance.1 disaster in the Persian Gulf,will wipe out the economic activity,of a few decades in Pakistan.

    Hence,the Pakistan state should use N-power,and there are several nations,which will supply the tech and reactors,at ultra low costs,with 40-50 year repayment tenors, and will also,in some cases,supply the N-plant free of cost,and operate the same – to earn profits,from sales to Grid.Several nations are exiting N-power,and so, their technologies and reactors,are useless – as is,their stockpile of LEU and DU.They will be glad,to sell their LEU and DU.

    Some of the Pakistani enrichment facilities and the NFC,are already under IAEA inspection – but if they are to kept secret,enriched uranium or the fuel rods,can
    be obtained from PRC,or France or Russia etc.In that event,there is no controversy over generation and use,of DU.Ideally,the yellow cake should be processed into UF6, and enriched in Pakistan – as that provides the basis,for the dramatic upgrading,of the entire nuclear fuel supply chain,in Pakistan.In such cases,some ore suppliers require the return of DU – as per a set norm.Return of some of the DU,is good,as it obviates the storage risk.

    Power is a fungible commodity – but the uranium ore,is not.So the uranium can be,within limits,diverted to the HEU program.From the DU stock of a batch,it is
    possible,via scientific testing,to trace the COO of the ore – but even,this minutae in uranium accounting,can be navigated.

    As a matter of N-Fuel supply risk,in the current scenario,it would not be unreasonable, to ask for several years of LEU – which insulates the nation,from fuel supply risks (of price,quality and quantity) – which is the only risk – and so,you have have a fixed price fuel supply,with a viable commercial use,of the DU – in the
    military – and a covert generation of HEU – which makes the fuel cost – nil to negative.

    It is irrelevant,that Pakistan has uranium reserves -as it is in the strategic interest of the state,to understate the quality and quantity,of the ore, and generate as large, a stockpile as possible.Further any mining,is the extraction of poison,from the earth’s core,and bringing it onto the earth’s surface,or into contact with water acquifiers and bodies.It is best that that this poison,is dumped,in 3 rd countries.

    There is also no DU disposal risk,as nations like USA/France/Russia and PRC,need to worry about it,far more.Sooner or later,these nations will need to make DU
    dump farns,in some nation (with exceptional security) – and the excess DU in Pakistan,can be dumped there – if the Pakistani ordinance factories,cannot use the
    DU (which is extremely unlikely).

    Lastly,there is no security risk,to the N-Power plants – as a gas,naptha/liquid fuel power plant,can be blown to smithreens,at the fuel dumps or the plant or the
    pipelines – by just a elemenary ED, and not even a IED or a Grenade.On the other hand,all these toys,have no impact on a N-Power plant.The reactor core,can survive a tactical N-Strike.

    Even if there is human sabotage,it will have no impact (although a liquid fuel plant,can be blown to bits) – so long as the coolants,moderators and conductors,are working.Fuku occurred,because the pumping system which evacuated the heat,from the reactor – just collapsed.Chernobyl also blew up,as the core temperature in the reactor core kept rising,as the control rods failed,and the reactor could not be cooled (for whatever reason) – so it just blew up.Simple !

    It is said that the sound of the enriching centrifuges,capture the recitation of “some specific ayats of the Quran”,strung and recited at a certain speed and frequency. It is the divine calling.

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  6. Like I said in my post,as above on April 14,2020 at 10:35 am,what the IMF/World Bank and the Pakistani state could not do for 73 years – COVID and my prophecy has ! dindooohindoo

    The CAD has crashed and will turn surplus in less than 5 months – as IRP (Islamic Republic of Pakistan is the only viable exporter,for several labour intensive and agri and animal husbandry products).It will be viable to fly camels and donkeys,to the world in 747s and C-130s for meat – it will occur soon !

    https://www.dawn.com/news/1562821/current-account-deficit-shrinks-a-whopping-73pc-to-under-3-billion-economic-survey-reveals

    The austerity which an Islamic state SHOULD have – BUT DID NOT – has come via COVID !

    This is the time to code austerity in the DNA of all subjects of Islamic states – which will also offset the Oil shock to Islamic economies

    It might be noted that 90% of the dead and 95% of the infected are in Christian nations !

    The next issue for IRP is the fiscal deficit – and for that also there is a solution !

    The disaster is for large populated nations,with higher cost manufacturing (w.r.t PRC) and large unskilled labour in manufacturing and agriculture.

    Which is India !

    We are witnessing the destruction of India – in slow motion !

    The IRP can give me a diplomatic passport and a posting in Geneva and USD 5 million !

    I will pray for them and solve all their problems

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