Briefing to NA panel: Govt paints pretty grim picture of power sector

ISLAMABAD: The government Wednesday said that if any sector will sink the country’s economy it is the power sector as the volume of subsidy is 12 percent of total budget, which is higher than defence budget and annual development budget.

This was stated by Secretary Power, Rashid Mahmood Langrial while giving a detailed briefing to the National Assembly Standing Committee on Power presided over by Sardar Riaz Muhammad Khan Mazari on performance of power sector, its financial position, and issues.

He presented a very bleak position of power sector, saying that power sector lost Rs 1.072 trillion in just one year over and above earmarked subsidy adding that the sector is the highest loss-making government institution.

“If any sector will sink the country’s economy, it is the power sector as it lost Rs 1.072 trillion in one year and the sector is functional due to Finance Ministry’s extraordinary support. We don’t spend as much on defense as we do on subsidies,” he added.

Secretary Power said that circular debt stood at Rs 2.253 trillion as of June 30, 2022 of which payables to power producers were Rs 1.351 trillion whereas Gencos payables to fuel suppliers were Rs 101 billion.

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He said main reason for the economic pressure faced by the country is the problems in the power sector, saying that privatisation of power companies will not bring profit but efficiency will definitely improve.

He said, it is the government’s decision to keep tariff of Rs 5 per unit for 40 percent of domestic consumers through subsidy which, according to him, is not sustainable. Currently, national average tariff is Rs 22.48 per unit. The average tariff for domestic consumers is Rs 19.53 per unit, commercial Rs 29.68 per unit, general services Rs 28.90 per unit, industrial Rs 25.87 per unit, bulk supply Rs 28.44 per unit, agriculture Rs 15.96 per unit others (AJK, SL, RC) Rs 27.18 per unit. The Discos overall recovery is 90 per cent.

Secretary Power also shared reasons for the increase in generation cost which includes higher prices of imported fuels and capacity payment to power producers, adding that increase in fuel prices also increases the share of subsidy. He argued that hydel generation production has increased due to rains.

Last month, the price of LNG spot cargo was $40 per mmbtu and if the government would have procured LNG at the rate, the cost of electricity could be Rs 70 per unit. The Petroleum Division decided not to buy such expensive LNG.

Rashid Langrial informed the Committee that there are 36.595 million electricity consumers in the entire country and of these, 31.5 million are domestic consumers. He said, 11.2 million domestic consumers are eligible for subsidies.

Last year, Rs 2.892 trillion were spent on electricity production whereas the government received only Rs 1.535 trillion, showing a shortfall Rs 1.351 trillion.

The Standing Committee postponed the Electricity Generation, Transmission and Distribution Amendment Bill 2021 till the next meeting, after a couple of members from Sindh proposed amendments to the Bill.

The Committee passed Private Power & Infrastructure Board (amendment) Bill, 2022 unanimously with a minor amendment which will merge both PPIB and AEDB.

During discussion on this Bill, Secretary Power acknowledged that the contract of Managing Director PPIB, Shah Jahan Mirza has expired but he has been brought to the meeting for assistance, adding that Power Division has sent summary for extension in contract for another six months.

The issues like shortage of meters, bursting of power transformers and less recovery in Discos also came under discussion.

According to official statement, Secretary, Power Division informed the Committee that in future no power generation plant would be installed which generates electricity on fuel. The Committee expressed its dissatisfaction regarding un-announced load shedding especially during Eid days.

While discussing the Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Bill, 2021 (Government Bill), the Secretary, Power Division informed the Committee that the provincial rotation clause creates hurdles in the appointment of Members Electricity and Finance. The Committee recommended that after one month, the vacant post should be fulfilled on open merit to make the appellate tribunal functional.

The committee deferred the matter raised by Muhammad Anwar, MNA regarding the worst load shedding in District Lakki Marwat, the starred question no. 49 moved by Syed Mehmood Shah, MNA and Starred Question No. 38 moved by Mohsin Dawar, MNA till its next meeting.

MNAs Ch. Khalid Javed, Sardar Muhammad Arfan Dogar, Syed Ghulam Mustafa Shah, Engr. Sabir Hussain Qaimkhani, Saira Bano, Dr Muhammad Afzal Khan Dhandla, Muhammad Abdul Ghafar Wattoo, Makhdoom Syed Sami-ul-Hussain Gillani, Mir Khan Muhammad Jamali and senior officers/officials from the Ministry of Power Division attended the meeting.

Copyright Business Recorder, 2022