EDITORIAL: So, once again the government faces the “challenging task” of extracting recoveries – this time more than a trillion rupees – from chronic running defaulters of five power distribution companies (Discos) of Sindh, Khyber Pakhtunkhwa (KP) and Balochistan. Just last week Power Minister Awais Leghari revealed that the “total stock of receivables” now stands at Rs1.9 trillion, whereas the circular debt has now risen to Rs2.6 trillion.
This is not surprising at all. Because this is exactly what you get when you run Discos on the tried and failed formula where they cannot recover full cost of generation from consumers at unfeasible tariff rates set by the government, and must rely on subsidies and borrowing to fill the gap; constantly feeding the circular debt.
That’s not all. Discos’ own incompetence, inefficiency, corruption and downright theft continue to go unaddressed despite all sorts of governments making all sorts of promises over many, many years. Even this time, there is, reportedly, “a very strong impression within the federal government that the amount pending against running defaulters is massively overbilled by Discos to hide their own theft”.
Therefore, while pending recoveries were only bound to rise, it is shocking that there is still no serious talk of a solution to this problem; which explains why it has become a never-ending one. Whatever happened to the committee formed by Prime Minister Shehbaz Sharif, in the dying days of the PDM (Pakistan Democratic Movement) government, that was supposed to find legal ways to facilitate private sector participation in the management structure of Discos?
Regrettably, nobody in any serious position seems to realise that privatisation is the only practical and logical way to proceed. Yet even that is not going to be as simple as signing a paper and corporatising them. They must first be made attractive to serious investors, which will require serious structural changes. Even something like K-Electric, whose performance improved and losses decreased but shareholders got nothing at the end of the day, will not work.
These reforms require time, money, planning and, above all, political will. Yet all we have heard from the top in all these years is hollow debate about privatisation fizzling out in favour of non-starters like dumping Discos onto provinces without explaining how they would be any less clueless than the federal government. Let’s not forget that the cost of everybody’s incompetence – Discos, defaulters, and the government – is paid by consumers. They also foot the bill for all the kickbacks, corruption and theft that run up and down the entire power chain.
These are not problems without solutions. They’ve just been made exactly that by successive governments falling all over themselves as they pretended to look for solutions. But now the economy has reached a stage where such things are not only unforgivable, but they are also simply unaffordable. And that might finally shake the government into effective action, especially as it makes tall claims about doing whatever it takes to turn things around. Time will tell, though nobody is holding their breath.
Copyright Business Recorder, 2024
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