Caretakers likely to ease the woes of power sector

ISLAMABAD: The power sector’s capacity payment is likely to touch Rs 3.766 trillion per annum by FY 31, 75 per cent of total electricity bill, which will make electricity affordability unsustainable for all categories of consumers, well informed sources told Business Recorder.

Capacity payment which was just Rs 185 billion per annum in FY 13 is now hovering around Rs 1.954 trillion. However, during this period Energy Purchase Price (EPP) which was Rs 663 billion in FY 13 has now touched the mark of Rs 904 billion and it will be Rs 1.246 billion by FY 31.

“CPP which was 22 per cent of total tariff in FY 13 will be 75 per cent in FY 31,” the sources added.

Provinces, LEAs to be taken on board: PM asks power sector to act against defaulters

The Power Division has proposed implementation on “old proposed measures with new words” to the caretaker government with the assertion that now failure is no option, after which massive crackdown has started against power theft.

Power Division, in its presentation to the Prime Minister has submitted several short, medium and long term steps to handle the gap of Rs 976 billion.

For instance, to deal with under recovery of Rs 387 billion and loss/ theft of Rs 201 billion, Power Division has proposed a medium-term mechanism, saying that the difference between supply of electricity to AJ&K at bulk rate and payment at recovery rate be funded by Finance Ministry. Current loss level will be reduced gradually. The financial impact of losses/ theft is Rs 65 billion in AJ&K.

However, no mechanism has been suggested for recovery of Rs 478 billion from agri-tube wells in Balochistan as neither the provincial government nor farmers are ready to pay their agreed share of this bill. The current losses/ theft in agri-tube wells sector is Rs 83 billion.

For FATA, where losses/ theft are Rs 50 billion per annum, Power Division has suggested that supply options be revisited along with outsourcing of operations.

The sources said, for recovery of Rs 390 billion of losses/ theft, technical intervention has been proposed for recovery of Rs 126 billion, by outsourcing of feeders whereas losses are 30-60 per cent to recovery Rs 140 billion. For recovery of Rs 323 billion in areas whereas losses are over 60 per cent, implementation on enforcement measures has started. For interest charges of Rs 171 billion, surcharge @ 3.23 per unit for different categories (national average Rs 2.63 per unit) has been imposed.

According to Power Division, the amount of Tariff Differential Subsidy (TDS) for Discos is Rs 158 billion. The TDS amount for domestic consumers has been reduced to Rs 122 billion from Rs 433 billion through tariff restructuring. However, with respect to Rs 36 billion of agriculture consumers, protected consumers to be separated after World Bank survey.

On TDS for K-Electric (KE) of Rs 169 billion, new contractual arrangement of PPA, ICA and TDS agreements will be put in place.

Power Division has submitted a National Electricity Plan which is as follows:

Short term Actions: (i) anti theft campaign – to mitigate system loss of around Rs. 589 billion; (ii) generation cost reduction – to mitigate the impact of high tariff through addition of solar power and; (iii) increase in demand – announcement of winter package for incremental use.

Medium term Actions: (i) drive for energy conservation – plan already prepared ;(ii) generation cost reduction – renegotiation on debt tenor increase; (iii) operationalization of CTBCM – competitive market for bulk consumers 1MW;(iv) private sector participation in power sector entities – IPO for national transmission and 1 DISCO as pilot; (v) subsidy reform – targeted & direct subsidy for domestic and agriculture/ reduction in cross subsidy and;(vi) anti-electricity theft law and force. Long term Actions: (i) privatisation of Discos – fresh exercise to be initiated by Privatisation Commission; (ii) indigenization of fuel and technology; (iii) technological improvements in transmission and distribution and system expansion and; (iv) Circular Debt Management – flow and stock.

Copyright Business Recorder, 2023