The greatest puzzle is where the Rs 342 billion paid to IPPs and other generating companies (Gencos) with the objective of clearing the circular debt - considered the reason behind massive power shortages - go? Why is load shedding as long as before the payout except during rains when hydel generation kicks in?
Power sector experts maintain that the answers to these puzzling questions lie in the earlier payout of Rs 301 billion to the IPPs and other Gencos in 2009-10 that were parked on the books of Power Holding Company Limited. The previous government was unable to follow up the elimination of circular debt with power sector restructuring which merely led to the debt resurfacing. To add insult to injury professionals were eased out of the sector and during 2012 the control of the sector was vested on non-professional Joint Secretaries of the Ministry of Water & Power.
During last year one Deputy Secretary was given charge of National Transmission & Dispatch Company (NTDC) while the position of MD Pepco was given to one of the Joint Secretaries of the ministry - a position he retains to this day. Non-professionals were also hired as Discos' CEOs consequently mostly juniors ran the show giving rise to a bureaucratic jargon: holders of "look-after" charge.
"It was because of the unprofessionalism and continuous change in Secretaries Water & Power (Saif Chattha being the 9th secretary in the last five years) that Pepco payables ballooned to Rs 500 billion," sources added. During this period the banking sector also squeezed the power sector by reducing the working capital of both Gencos and IPPs; and as a consequence the ability to arrange for fuel or to maintain stocks as per Power Purchase Agreements (PPAs) was dramatically reduced.
Power sector analysts further maintain that the situation remains the same even today and even with the IPPs fully paid and announcing significant dividends, they are unable to dispatch power in full. According to the PPAs, each IPP is obligated to maintain stocks equal to 25 days of use, to bill NTDC/CPPO after one complete month of generation and to only make an issue if the invoiced amounts are not paid for another 45 days. As the right professionals are not there none of the above has been assured with the IPPs having the last laugh.
The Ministry of Water and Power's failure can be gauged from the fact that Supreme Court of Pakistan is managing load shedding schedules while the ministry and others simply try to implement the court directives. The outcome is the industrial sector is facing 10-hour cuts, which has never been seen during last 50 years. The recovery against debt defaulters has been given to NAB against which Lahore High Court has issued an injunction, leading to freezing of recovery against debt defaulters. The newly-elected government has given the task to apprehend power thieves to Director FIA Hussain Asghar who has been empowered to also apprehend Disco officials involved in the crime.
Dr Musadik Malik, Special Assistant to Prime Minister, in a chit chat with Business Recorder claimed that substantial reduction in load shedding across the country has been witnessed but it is not being projected properly. However, he said that the issue of Khyber Pakhtunkhwa is being treated differently as Peshawar Electric Supply Company (Pesco) is cutting power supply to those areas where recovery is negligible. Replying to a question, he said Prime Minister Nawaz Sharif is also worried about current power crisis and added that the main issue facing the government is that there is no mechanism to estimate demand accurately as the previous power sector high-ups did not touch this issue.
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