Amount transferred to PHCL: Rs 136.4 billion debt swap deal signed with banks

The Federal Government has formalised a debt swap deals with banks, according to which private power sector companies'' debts amounting to Rs 136.4 billion-Rs 24.6 billion less than the amount approved by the ECC--would be transferred to the books of the Power Holding Company Limited (PHCL). However, load shedding duration for urban and rural areas will remain at 6 and 12 hours per day.
This was stated by Secretary, Water and Power, Imtiaz Kazi, after being grilled by the National Assembly Standing Committee on Water and Power, headed by Ghulam Mustafa Shah on massive unannounced power load shedding which has paralysed the entire system.
"We have signed debt swap deals with banks today, and I hope this will be instrumental in providing relief for some time as substantial part of private power sector companies, including Hub Power Company (Hubco) and Kot Addu Power Company, have been transferred to the books of Power Holding Company Limited (PHCL)", he said.
Apart from debt swap deals, the Ministry of Water and Power has directed the distribution companies (discos) to improve their collection to ensure payment to the power generation companies, Kazi added. However, analysts maintain that this relief will not be effective for more than four months, which implies that the intensity of load shedding would increase in June and July.
In reply to a question raised by a Member, the Secretary informed the committee that six power generating units have been shut down due to non-availability of fuel and if these units run they can generate 1400 MW electricity. "We are facing 5000 MW shortfall in demand and supply, and the main reason for this situation is shortage of funds," said the Managing Director of Pepco, Rasool Khan Mehsood, who assisted the Water and Power Secretary during the meeting.
Afzaal Husssain, who stated that he was attending the Standing Committee meeting in spite of a family obligation, took strong exception to the continuing massive load shedding. He argued that the wheat crop was destroyed due to load shedding, and added that had there been no rain there would have been a wheat crisis in the country.
He asked why the Minister for Water and Power, Naveed Qamar had made a statement in the Senate that load shedding would be eliminated? Who briefed the Minister that there would be no load shedding in the days to come? He may have been briefed by the Secretary Water and Power or Managing Director of Pepco. However, the Managing Director clarified that he did not give any such briefing to the Minister. "I did not mislead the Minister. I personally think he might have thought that the situation would remain comfortable for four or five days," Mehsood added. He said that the National Transmission and Dispatch Company (NTDC) is running power plants at its own risk to make available maximum electricity, adding that with this practice, the entire system can collapse. He further stated that in this financial situation power shortage cannot be bridged.
Afzaal cautioned the top brass of Water and Power Ministry by saying that 70 percent electricity is being stolen by the rich and poor, suggesting that if the government introduced flat rate there would be no theft. Sajjad-ul-Hassan, MNA from Okara, also criticised the Ministry and Pepco for discrimination in power supply to the consumers.
He pointed out that load shedding in some areas is 16-18 hours whereas in some areas it is zero, which is massive discrimination. "I live in Okara city where load shedding duration is about 12-16 hours whereas load shedding in adjacent areas is 2-3 hours or zero because the area is the constituency of a Minister," he added.
Hussan lamented the fact that his constituency is subjected to heavy load shedding, and the Managing Director assured him that there would be no discrimination against his constituency while admitting that VIPs'' requests are honoured. Yousaf Talpur, MNA from Sindh, also argued that load shedding should not be discriminatory.
Secretary Water and Power assured the committee that duration of load shedding should ease from Monday night as some money has been released by the Finance Ministry besides debt swap deals. He informed the committee that power generation has not increased during 8-9 year rule of previous government, which is the main reason for the load shedding. Though a number of hydropower projects have been started by the Federal government but funding is an issue, he said, adding that no funding is available for Bhasha hydropower power project despite the fact that Wapda has done a lot of development work on it.
Replying to another question he said that government has imposed two types of levies on consumers of electricity ie Fuel Price Surcharge (FPA) and surcharge. FPA is a pass-through item whereas surcharge is meant to bridge the gap between generation and delivered costs. For instance, price of one unit is Rs 9 whereas its sale price is Rs 7.50 per unit. The gap of Rs 1.50 per unit is bridged through tariff differential, which is called ''surcharge''. For this, the federal government extends subsidy through the budget, or Pepco arranges this amount through ''surcharge''.
"We are increasing power rates, gradually, (20 or 40 paisa after two to three months) to minimise the gap between generation and sale cost otherwise the government has to pay Rs 40 billion subsidy per month. The committee also directed the Pepco to make Board''s mandatory for mutual transfer of employees of the companies. Chief Executive of Alternative Energy Development Board (AEDB) briefed the committee about the performance of the company in attracting investment in alternative energy projects.