Oil and gas companies: Pepco pays another instalment of Rs 22.5 billion to clear debt

Pakistan Electric Power Supply Company (Pepco) has paid another instalment of Rs 22.5 billion to oil and gas companies to clear its chronic circular debt that had almost crippled and incapacitated Pepco, MD Pepco, Tahir Basharat Cheema, told Business Recorder.
Cheema said that Pepco has made three payments amounting to Rs 80 billion, Rs 13 billion and Rs 22.5 billion to the oil and gas companies to clear the circular debt of about Rs 190 billion to improve the general financial health of the company and generate more thermal electricity.
Cheema who was quite frank in analysing the performance of the different electricity distribution companies said that three companies namely KESC, Hesco and Pesco have been unable to bring down the electricity line losses, which are a great burden on the meagre financial resources of the nation.
He said the current losses of Karachi Electric Supply Co (KESC) were the highest at 38.5 percent followed by Hyderabad Electric Supply Co (Hesco) 36 percent, Peshawar 33 percent and Quetta 24 percent. "1 percent line loss costs the nation Rs 5 billion" he asserted.
He appreciated the performance of Islamabad, Gujranwala, Faisalabad, Lahore and Multan Electric Supplies Companies that have brought down their line losses between 7.9 percent to 13.5 percent.
"The overall national electricity line losses are 20.30 percent mainly due to poor performance of Karachi, Hyderabad and Peshawar electricity supplies companies", he added. About determination of the power tariff for the domestic, commercial, agricultural and industrial consumers, Cheema disclosed, the electricity tariff for all categories of consumers is calculated on the basis of performance of the distribution company that had minimum lines losses in its distribution system.
"The heavy financial burden of line losses of Karachi, Hyderabad, Peshawar, Quetta and other companies is picked up by the federal government in the form of subsidy and is not passed on to the consumers" he clarified.
With regard to the proposed withdrawal of the subsidy from 1st July 2009, he said it is now up to the National Electric Power Regulatory Authority (Nepra) to find ways and means to compensate for the line losses of the electricity distribution companies. However senior parliamentarians have observed that the Wapda and electric supply companies officers steal the power and then show line losses causing burden of Rs 50 billion on government annually.
They say that in city like Hyderabad there was 'Kunda system' all around in the open and Hesco had failed to stop it. They said KESC was privatised with a view that the new management would make significant investment in power generation and cut down the line losses but it has not achieved this objective so far.