Prime Minister Shahid Khaqan Abbasi held a press conference claiming massive contributions by the PML-N government towards improving the power sector fundamentals while the same day the Special Standing Committee on circular debt met where a completely different picture was being presented to members. Shahid Khaqan Abbasi claimed that the country's power woes were resolved as 10,000MW had been added to the national grid increasing capacity to 28,704MW from 18,753MW in 2013. He further claimed that during the month of May 2018, power generation was 17,000MW against 11,170MW in 2013 - 25 percent higher. Managing directors of Pakistan Electric Power Company (Pepco) and Public Private Infrastructure Board (PPIB) informed the committee members that installed capacity today is 31,000MW, with 6,500MW added to the national grid during the past three years. A report released in 2013 revealed that installed electricity capacity in 2013 was 23,538MW though actual generation was much less than half.
The reasons in 2013 for failure to translate capacity into generation are the same as today, reflecting little or no improvement in key areas other than generation due to the failure of the PML-N government to undertake a holistic approach to deal with the sector's varied issues. First, high transmission losses due to an obsolete transmission network, with the Water and Power Secretary acknowledging late 2012 that one of the major impediments to achieving capacity generation is the inability of the transmission system to transmit more than 15,000MW. The PML-N did claim earlier this year that it had strengthened the transmission system to 16,500MW but the special committee was informed that the system had transmitted up to 20,000MW a few days ago which, perhaps, partly accounts for two major power failure across Punjab and Khyber Pakhtunkhwa this month. Notwithstanding this claim, the Prime Minister acknowledged challenges to the transmission and distribution system adding that NTDC is allocating funds to resolve these issues. He did not mention any details of the funding or the precise location of transmission lines being upgraded and one would be hard pressed to conclude that either he did not know details or that he improvised his response to appease the reporters.
Second, a rise in circular debt, reflective of the sustained failure of energy sub-sectors to clear their bills leading to major liquidity issues that end up disabling Pakistan State Oil's (PSO's) ability to open letters of credit to import fuel. PML-N inherited a circular debt of around 480 billion rupees, at a time when the then government was not engaged in switching off feeders for those areas where receivables were high. The circular debt by April was 579 billion rupees (including K-Electric dues), the committee was informed; however, sector analysts maintain that circular debt today is as high as 800 billion rupees, excluding the 500 billion rupee parked in the PHPL. When the Prime Minister was asked about the circular debt, he stated that it was less than what it was in 2013.
Third, Joint Secretary Power Finance noted that the generation cost is 8.52 rupees per unit while consumers are being charged 11.9 rupees per unit as the government is facing a loss of 32 paisa per unit due to technical losses giving a cumulative loss of 157 billion rupees. And if one adds the interest charged on the borrowed money parked in PHPL the cost of electricity to consumers is steadily rising. When asked by the committee members who pays these charges, the Joint Secretary unhesitatingly stated: "the consumers". The Prime Minister did not touch on the cost to consumers and like his other party members focused entirely on generation capacity. Sector experts, within and outside government are agreed that the solution lies in encouraging, even if it requires a subsidy, to those who set up renewable energy plants - solar or wind as that would entail the cheapest solution.
Fourth, generation companies (Gencos) are highly inefficient and run on expensive fuel to boot, though they were added to determine total generation capacity in 2013 as well as today. It is time that the next government takes such inefficiently run plants out of the mix. Additionally, the government has made agreements with new generation plants that are coming on line to pay whether it buys electricity or not. Demand varies according to the season and this would add to the cost to consumers. However, demand is rising with time and as the Prime Minister correctly pointed out it rose from 6.3 billion units in 2013 to 9.3 billion units today.
The Prime Minister's offer to provinces to take control of gas and power sectors seems a bit too late less than 72 hours before his tenure ends. This is playing with the truth in a big way as in September 2017 all provinces except Punjab had requested the centre to implement Article 172(3) of the constitution and grant them the right to exercise joint, equal and individual control over gas and oil reserves inside their respective boundaries and proposed that a decision in this regard be taken in the next Council of Common Interest be taken. That decision was never made.
The Abbasi administration is using the platform available to a sitting government to make its election bid and one can understand that. However, it is about time the party leadership acknowledged that the public is a lot more informed than it is given credit.
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