Will the power sector ever deliver?—I

The sector shenanigans have resulted in a near existential threat for the Country. Although, the situation has been in the news since long, but no one ever does anything to correct the continuing rot. The woeful part is that all governments in the past have vowed to change the faltering complexion altogether, but sadly everyone has added upon the woes. Probably, the political economy of the Sector is too great not to be reaped. Each dispensation at Islamabad has propagated plans for possible resurrection of the Sector; but, unfortunately, instead of any change these plans have failed to make any headway. Painfully, the oft repeated solution has been to raise the electricity tariffs with the hopes that soon all would be well. Now we are saddled with an exorbitant tariff which no one can pay. That the tariff make-up is trite and a vestige of the past is another burden to contend with.

Now that a new government is in the offing and that all political parties have promised to focus on the Power Sector, it is felt that the best for them would be to understand the issues from the most damning to fathomable ones. Hopefully, this time around the politicos will live up to their election promises. Besides, it is hoped that unnecessary kite-flying would be avoided.

Presently, the most deficient power policy and the ensuing plan (thoughtlessly updated too), are to be implemented by the governing Ministry of Energy through its Power Division. As the policy and the plan are basically looking towards sustainability of the sector alone without understanding the trite design and architecture which, whatever happens, will not allow any correction; hence, the first of the steps has to be the priority redoing of both of these documents through a consultative process whereby practitioners are able to provide the needed advice.

Once the policy and the plan are corrected, then comes the issue of the governance structure viz. the non-professional Power Division. Here, the simplest solution would be posting of an experienced sector practitioner as one of the Additional Secretaries (a practice till 2013 when the all-powerful DMG / PAS took over), at least two technical Joint Secretaries and may be an equal number of Deputy Secretaries with due professional experience. Incidentally, this too was a practice in the past. The Federal Secretary can for the moment be a generalist, but very soon as a necessity, professionals have to be considered for the position. Along with the professional up gradation of the Ministry, the same general rule has to be applied to the Regulator NEPRA, PPIB and the CPPA(G). Without meeting this basic but cardinal requirement, there are no chances at all for the present and up-coming dispensation to ever deliver. On the other hand, the generalists holding the reins will cause obstacles than any succour, thus this change is first and the foremost to be implemented along with the professional redoing of the power policy and the current plan. That is, if at all we plan to correct the situation.

Once this is achieved, then we will focus on the present management of the Power Sector Corporatise Entities (PSCEs– GENCOs, NTDC and the DISCOs). It is seen that the same is in the hands of the Board of Directors, basically comprising of ex-officio/official representation from the Power Company itself and the governments and then the most important independent Directors. Lately, Auditor General of Pakistan’s audit has raised serious observations on the real incomes and tax contributions of dozens of officers of the Ministry of Finance, who are serving on the boards of 60 state-owned companies. The AG has objected to the non-deduction of income tax, the nominal role of the MoF (Ministry of Finance) and continued poor performance of the related SOEs. Last month’s report of the MoF itself on the SOEs’ performance revealed losses for FY 2022 to be more than Rs 750 billion. In other words, the issue also relates to the lacklustre performance of governmental nominees on the PSCEs’ BoDs.

Besides, even more serious is the makeup of the independent directors on the GENCOs, the NTDC and the DISCOs BoDs. The prowess of such nominees has been downhill for the last decade or so, while reaching its nadir at present, when in great abundance junior politicos were notified by the government – specially, for the DISCOs. Such nominations are basically an affront to the sensibilities of people in the know of things. The sad part remains that whoever was responsible in the government for these nominations and that too in negation to the law of the land and the regulatory regime, probably, has no qualms. Incidentally, it has again been the AGP that has taken up the cudgel and billed most of the nominees to the DISCOs BoDs as un-qualified for such positions. This report relates to the performance audit of the boards of three DISCOs and which at present is under DAC proceedings.

If at all the power sector has to be resurrected, then such blatant intervention has to be curbed and instead the best of the best and also the most suitable of professionals, have to be nominated in the Boards – specially, when the management remains with the boards now. Besides, it is what the law of the land also decrees. All this is not difficult at all as experts are available and such persons would simply change the complexion of the boards in all sense. In case, the situation remains as it is, then there are no chances at all – specially, for the DISCOs to deliver. That, the GENCOs have degenerated into descript and decadent monoliths highlights the problem. That the NTDC is embroiled in countless procurement and contracting disputes further proves the above thesis that the present boards are most wanting to say the least.

(To be continued tomorrow)

Copyright Business Recorder, 2024