Jolted by the severe backlash against highly inflated power bills resulting in protests across the country joined by political parties and businesses, the government scrambled to address the situation.
One option was to approach the IMF (International Monetary Fund) and its approval to provide relief to low- income consumers while the other option was to dig into the malaise prevailing in the power sector, notably, theft, free use of electricity by the privileged class, non-payment of electricity by consumers and the incompetent governance structure of the sector.
Considering the multiple issues in the power sector and its gravity, not much relief is expected out of both of these measures.
The position of IMF has been categorically spelled out in the following words: “The International Monetary Fund (IMF) has granted Pakistan permission to extend the payment of electricity bills for consumers using up to 200 units over three months. In exchange, Pakistan has to announce an increase in gas prices of up to 50% effective from July and a crackdown against electricity theft.”
This trade-off may provide some timely relief to the low-income segments of society but the issue will continue to persist. It is of no benefit to industry and businesses, notably, the hard-hit export industry. The key meaningful message in the IMF statement is the “crackdown against power theft”, being one of the key factors hitting the consumers.
Caretaker Prime Minister Anwaar-ul-Haq Kakar has received a detailed briefing on the power sector and directed relevant authorities to take immediate action against electricity theft.
As a follow-up, the caretaker energy minister announced that the federal government has decided to launch a countrywide crackdown against electricity theft, along with removal of corrupt and politically affiliated officers and changes in the composition of incumbent boards of power distribution companies amidst a report that claims that the ten distribution companies in Pakistan are facing losses of Rs 589 billion annually, adding that theft and non-payment of electricity bills are the major causes of this huge loss.
The minister is reported to have stated that the government has planned a comprehensive three-pronged strategy to deal with the issue of power theft. Taskforces will be set up at the provincial level headed by Secretaries of Energy Departments of respective provinces to monitor performance of distribution companies.
A control room is also being established at Power Planning and Monitoring Company (PPMC) for online monitoring of Discos’ performance.
According to the proposed strategy, technological interventions will be made in areas where electricity theft is 15 to 30 percent, total impact of which is Rs 126 billion. The government will install AMI meters (10,689,318) and transfer metering (124,611). For this purpose, an investment of Rs 368 billion will be required at 2,588 feeders (23 percent).
Secondly, involvement of private sector will be ensured in the management where electricity theft is between the range of 30 and 60 percent i.e. 1,249 feeders (11 per cent). An investment of Rs 140 billion will be required for this purpose.
First round of bidding received no response and now the next round is being planned. The World Bank has been requested for provision of a hedge fund to mitigate the initial risk of the first mover in the private sector.
The recipe so promptly provided by the power ministry and as announced by the minister is understandably from the files of the ministry - tried and tested multiple times before. Even if half of this is honestly implemented it will take months, if not years, to see something tangible happening in consumers’ interest. Nothing soon is likely to happen. Coming months would be testing times for public patience and the power ministry’s competence to put its own house in order.
Even some fast track doable measures such as a visible reduction in electricity theft, removal of corrupt and politically affiliated officers and changes in the composition of incumbent boards of power distribution companies constitute a formidable task.
The previous governments did take some steps multiple times but the clout or influence of thieves totally frustrated the government plans. Cronyism, nepotism, vested interests and political influence prevailed over merit and professionalism in setting up the boards of power distribution companies and the management teams under them. This mindset is not likely to change much under the caretaker setup.
It needs to be appreciated that the minister opted not to provide false hope to consumers and has been honest in stating the truth and reality on ground: “Power consumers have to carry the burden of those who steal electricity; electricity prices cannot be reduced until the elimination of power theft”. The minister ruled out any relief in power bills until improvement in recovery and reduction in losses.
The onus is now on the power ministry to set its house in order and has been made responsible for the consequences, rather than the minister who heads it.
Copyright Business Recorder, 2023
The writer is a former President, Overseas Investors Chamber of Commerce and Industry
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