The growing energy plague

Downstream state-owned energy companies have been awful for quite some time. It used to be the power discos for the longest time, but the disease has gradually transmitted to gas discos as well. The recipe for disaster has not changed much though. Less than desired tariff increase, ever-increasing inefficiencies, line losses, theft and piling circular debt. All sounds painfully familiar.
The government has taken an eternity to notify revised consumer gas tariffs, for one reason or another. From court hearings to political pressure and policy level indecision--delay has been the name of the game. The tariff determination authority Ogra has recommended and approved up to a maximum 14 percent increase in gas tariffs, but this may all count for nothing as the buck will be now passed on to the government, which is under immense political pressure, and different courts almost all across the country.
The major cause of contention is the dreaded UFG which Ogra has recommended at 4.5 percent as per the courts directions, and a long way off the governments desire of increasing the benchmark to 9 percent. Recall that the UFG losses have climbed to double digits from very manageable 5-6 percent five years ago.
Yes, the security situation is to blame for this, but only partially.
The major problem is that of distribution system losses stemming from core inefficiencies of the personnel and infrastructure. Things have gone from bad to worse and the distribution companies (read government instead of addressing the issues), kept on asking for more and more leeway in the name of UFG losses.
It is a no brainier that making the public pay for the state inefficiency would never go down well with the society. In order to bail the sick entities out, the devilish plan is to incorporate the billions lost in yesteryears, on account of theft, losses and disallowance of UFG, into the consumer tariffs. This is not how the crisis should be dealt, but this is probably the only way this government knows.
Initiating reforms with massive tariff rationalisation (hike) is not what experts prescribe--it sure is part of reforms but the sequencing is all wrong. You don have to go deep into history. Tariff rationalisation last year done in the name of power sector reforms did not pay dividends--and the situation is back to where it was pre-tariff rationalisation.
Things could get worse if the government gets its wish and the backlog is passed on at once.
With the state SSGC and SNGPL are in, it would be too naive to think they will fetch privatisation proceeds, anytime soon or at all. Billions will have to be doled out (remember IPPs Rs480 bn) before even thinking of presenting these for privatisation. The best way to get out of this mess is to get out of the business.
But, it is easier said than done; sadly.