Power sector's performance will remain poor until decision makers reform the sector in a transparent manner and give autonomy to a politicised regulator. Background interviews with power sector officials and experts suggest that the Ministry of Water and Power which deals with the power sector through Pakistan Electric Power Company (Pepco), power Distribution Companies (Discos) and Generation Companies (Gencos) is engaged in fire fighting instead of giving full fledged attention to structural issues which have choked the entire system.
Government has invested loans of billions of dollars from the World Bank and Asian Development Bank (ADB) on improvement in transmission and distribution system, but no visible improvement is evident in the system so far. "Power sector should be reformed properly either under a government set-up or through the private sector as happened in New Delhi. Transparency must be ensured prior to reforming the system," said an analyst.
Commenting on the current situation of power sector, Shahid Sattar- former Member Energy Planning Commission - said that first of all the government should reform the regulator (National Electric Power Regulatory Authority) which is staffed with political appointees instead of power sector experts.
"Without independent and competent regulator, power sector issues will not be resolved. The regulator should be manner by professionals instead of former bureaucrats with political backing," he added. Incumbent Secretary Water and Power, Nargis Sethi, who is to retire in December after reaching superannuation age, is focusing on raiding grid stations and other offices of Discos and Gencos with the objective of monitoring load shedding but dealing with structural issues is not on her agenda.
"Load management is one aspect of improving the system. There is a need for power sector's financial sustainability which is not being seen anywhere," said another expert on condition of anonymity. Sethi's critics argue that she does not have the capacity to deal with issues faced by the power sector, as she never dealt with such challenges in the past. She has served as Principal Secretary to the Prime Minister, which does not mean she has the capacity to deal with the sector which needs "out of the box solutions".
At least eight Secretaries of Water and Power have been transferred during the last three years due to which the sector's performance has gone from bad to worse. "Recovery, higher losses and GST issues with the Federal Board of Revenue (FBR) have choked the entire power sector but no mechanism has been evolved so far to deal with these key issues," said another official.
Presently, power sector losses are about 17.55 per cent but Nepra allowed Discos to pass on only 12.82 per cent losses to consumers. The Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on May 28, 2014 directed Nepra to pass on the entire loss to consumers saying that it is not possible for Discos to comply with the targets set by Nepra against average T&D losses of 17.55 per cent.
Ministry maintained that Discos will not be able to achieve a target of 12.82 per cent losses and estimates that these accounted losses would add Rs 45 billion to the circular debt. Discos submit their system investment plans to Nepra in tariff petitions but they have never implemented these plans citing different reasons. There is an atmosphere of "fear" in the Water and Power Ministry and Discos after Mrs Sethi took charge of the Ministry a second time, in less than two years time. She has brought her own team to the Ministry but Chief Executives of Discos who are responsible for implementing the policy are the same and most of them were found to be engaged in wrongdoings after investigation. For instance, Chief Executive Officer, Islamabad Electric Supply Company (Iesco) Yousaf Awan, according to NTDC's enquiry was found involved in procurement of substandard Chinese On Load Tap Changers (OLTC's) but no action has been taken against him because of his reported close ties with some influential government functionaries. Prime Minister Nawaz Sharif has not approved extension in his tenure but he is still CEO. Senate Standing Committee on Water and Power has also directed the Ministry of Water and Power to relieve CEO Iesco and other contract employees prior to the next meeting of the committee. CEO and Director (Operations) Lahore Electric Supply Company (Lesco) were recently arrested for "selling" load shedding in Lahore. Mrs Sethi has not taken any action against him and the situation in other Discos is not different from Lesco's. CEOs of other Discos are junior officers who do not have sufficient expertise to improve the system.
On the other hand, Nepra maintains that it is looking at poor area of performance in Discos's operations and has initiated a vigorous exercise to monitor key performance parameters. Discos' T&D losses are being monitored at the feeder and sub-Division level and they are directed to target such feeders and Sub-Divisions while making new investments. For improving billing and collection functions of Discos' Nepra has directed encouraging franchise models through which certain functions would be handled through franchisee, bringing efficiency to Discos's performance.
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