The power sector woes

Presently, the power sector has become an existential threat for Pakistan. The situation has been further exacerbated by the falling rupee and the ever-strengthening dollar.

We have ended-up with spare generation capacity (on account of stunted sales and the mindless policy of revenue-based loadshedding), inability of DISCOs to recover their revenues and scourge of illegal abstraction of electricity/power – evident all over the country.

Trite 1960s technology and the sad jump into sham AMI (Advanced Metering Infrastructure) assures that the things are not about to change – at least in the near future.

Various multi-lateral developmental agencies (MLDAs), mindful of their charters are up in arms with calls for immediate reform in the Sector. This for all is to somehow allow the Discos a free float within the present scene of a myriad policies, intruding Power Division, a lackluster regulator, BODs fully manned by politicos or their protégées, operational management with temps and that too who have the right connections and the unbridled NTDC, Gencos and IPPs on the prowl – the result of the last many reforms forced upon Wapda and the successor ex-Wapda PSCEs (Power Sector Corporatized Entities).

Delving into history would be most helpful. The first WB-sponsored reform was adopted during the late 1980 whereby Wapda’s distribution regions were converted into the UK modelled Area Electricity Boards (AEBs). That by then the UK had already decided to do away with this set-up and privatize the Sector is another story.

That the UK restructure edit’s Central Electricity Generating Board (CEGB) along with its regional electricity boards and privatized the whole sector by 1990 informs us about our belated doings. Presently, there is a clamour to bring back its ownership to the public domain in the UK.

Political, business and agriculture nominations were made on the AEBs and from thence on political interference has been institutionalized in the power sector. Not being left to the AEBs, the World Bank supported by other MLDAs decided that as WAPDA was still there in the stewardship role GoP was forced to take up another round of reforms resulting in the setting-up of PEPCO (wresting the Power Wing out of Wapda) as a management company and converted the AEBs into non-listed public limited companies – now known as the Discos, while also setting-up the NTDC (National Transmission and Distribution Company) and the four Gencos (owning all of the publicly owned generating assets – then 4820 MW in all).

These GENCOs, as programmed, have since simply shut shop with spare estates to be pilfered by looters. Even state of the art plants installed in 2012 and 2014-15 are shut pending repairs.

Presently, all of these ex-Wapda PSCEs are managed by distinct BODs. Unfortunately, there are only five power sector professionals amongst the 180 or so board members. Most of the members are either political to the core or their nominees – surely unrelated to the sector. So much is the importance of SECP’s (Securities and Exchange Commission of Pakistan’s) Fit & Proper Criteria for the board members.

And besides meddling in the day-to-day operations – especially of the Discos, these untrained persons are more interested in touting their protégées and assuring that the Discos wrongly invest in electrification of specific areas.

According to estimates, all of the budget for the loss reduction programme has been lost while catering for opening-up new areas for electrification – a crime in the sector’s lingo.

Thus, the last three reforms have weakened Wapda, have ended with Pepco converting itself to the PP&MC – an appendage to the Power Division, Discos and other PSCEs being run by politicos, a lackluster regulator, PPIB (Private Power and Infrastructure Board)/ AEDB (Alternative Energy Development Board) – a signing machine propagating IPPs and the related PPAs that cannot be implemented, hundreds of this genre in the pipeline that will further choke the Pakistanis with their mindless tariffs (mostly, over-invoiced and pipe dreams like the CTBCM (Competitive Trading Bilateral Contract Market) – found dead on arrival and governments who promise more reform).

What could be the solution? It all begs an answer. As the existing politically motivated boards or the non-professionals in the Ministries do not have the depth to select for any of the above positions, a distinct board of sectoral experts will have to be formed to interview probables for the position of CEOs, CTOs – a must for Discos to graduate to the next level of technology, the CFOs, CLOs et al for the PSCEs.

Serious O&M studies are needed to fix the right strength for each Discos, the NTDC and the Gencos and settle the issue of over-staffing, bloated HQs (DISCOs boast tens of BPS-20/21 functionaries against just one up to 1980), and possible filling-up of or other-wise of the 60,000 or so vacancies in the PSCEs, re-doing of all the BoD (riding them of the political fat and flab in one go) with only sectoral and allied professionals and that too who are paid (most necessary as against the presently so-called gratis ones).

Then comes the governmental representation on the 16 BODs (all of the PSCEs). These should necessarily be from the AGP’s office, the Finance Division and one from the Power Division. The fourth from the provinces would also have to be a hard core professional instead of anyone (sadly & erratically) holding the position in the Energy Departments.

The PP&MC (Ex-PEPCO) needs to be converted as an integral part of the Power Division and as a monitoring and reporting company instead of an entity responsible for planning – as if, the Planning Commission, the CPPA-G (Central Power Purchasing Agency-Guaranteed) and the NTDC were not enough. It should then be rightly named as the Directorate General of Power like the DGs (Oil, Gas & PCs) under the Petroleum Division.

Once the basics are done, then the present organogram – especially, of the Discos — has to be changed from the century-old set-up of SDOs/XENs/SEs and the CEs. It has to be based on the model of business units at the present circle levels etc. The details can be worked out by seeking advice from sectoral experts.

Along with the changed/upgraded BUs, comes the issue of enabling legislation to cater for the failed writ of the state in huge swaths of the country. Some of the requirements were drafted in 2011-12, but left as it is. The then managers had other issues to deal with – especially, to arrange for the badly needed MWs in those energy deficit regimes.

Now that we have a surplus regime (all dressed-up with nowhere to go), the possibility of enacting and implementing the required legislation should pose no problem at all. And without such support, the DISCOs will not be able to deliver. The enactment has to support full recovery of the billed units besides assuring consumer discipline – the missing link at the moment.

To concurrently follow would be to re-think the PPIB-AEB’s mandate and it’s staffing, what (CPPA-G) (Central Power Purchasing Agency-Guaranteed) does and has to do, the treatment of and the pipeline IPPs, the plans and policies in vogue (to be merged into one all-encompassing bible), the regulator Nepra (National Electric Power Regulatory Authority) and its failures as yet and what it should do and not do – reduce its burgeoning staffing with corrected direction etc. All in all, professionalism has to take precedence in all of these entities.

It will be difficult as it all hits the present wayward thought process and the interests of the non-professional beneficiaries of the system. However, nothing short of the above eight changes can resurrect the power sector of today. The faster all of these solutions are implemented, the better it would be for the country.

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Copyright Business Recorder, 2023