The government to be led by Imran Khan is to focus on power sector's recovery, transmission and distribution losses, which have made it highly unsustainable by replacing bureaucrats with technical experts. Presently, power sector sector's circular debt has crosses Rs1 trillion mark of which Rs 500 billion is parked in the books of PHPL, a company established to get loans in the name of power Distribution Companies (Discos).
The main reasons for the increase in circular debt are: (i) non-collection of 100 per cent billing Discos; (ii) non-resolution of payment issue of agri-Balochistan tube-wells and AJ&K; (iii) high system losses than determined by the regulator ;(iv) delay in issuance of notification by the regulator; and (v) non-payment of refund by FBR to distribution companies and recovery by FBR through coercive measures.
"The upcoming government would have to formulate a clear strategy to improve recovery and an approach that ends electricity theft - factors that are burdening the national exchequer through subsidies. The issue of circular debt can never be resolved unless recoveries improve," said an official on condition of anonymity.
The government must slash subsidies in the event that it decides to take an International Monetary Fund (IMF) programme with Asad Umar, the likely candidate for the position of Finance Minister, recently stating that all options are on the table including going on an IMF programme.
PTI Senator Engineer Nauman Wazir Khattak on a number of occasions took the stance that supply of electricity should be linked to recovery, a policy which is being implemented currently.
"We expect that PTI government will delink operations from political influence," he said adding that all the previous governments compromised on operations due to political pressure.
Over the years the transmission and distribution losses could not be curtailed by the Discos and having taken divergent and contradictory positions about losses almost all the Discos have now proposed new and higher loss levels than earlier requested. It is a matter of concern that Discos could not take measures to improve line and distribution losses.
In reply to a question, the official said that the incoming government would benefit from the power sector projects established by the PML (N) government and should desist from criticizing these projects; and focus on renewable energy and small dams.
He further stated that the new government must also focus on improvement in transmission and distribution systems which were actually not given due attention by the former government. The key focus of the previous government was on generation.
The power sector regulator maintains that addition of generation facilities have put added pressure for developing a strong transmission and distribution infrastructure to make the delivery of electricity to end-consumers possible. Over the years, the regulator has been stressing the need for strong and robust networks for uninterrupted power supply; concerted and urgent efforts of National Transmission and Despatch Company Limited (NTDC) and Discos can ensure sustainable reliable power supply to end-consumers
The regulator's report revealed that (39%) one transformer at 500/220 kV level were loaded above 80% of their rated capacity on June, 2017. At 220/132 kV level, (55%) 2 transformers were overloaded. In distribution sector, at the end of June 2017, about 37% of high capacity transformers (power transformers) were over-loaded (above 80% of their capacity). Similarly 29% of the 11 kV feeders, used for bulk transmission of electricity at distribution level, were found to be over-loaded, whereas more than 12% of the distribution transformers are loaded above 80% of their capacity. The report also noted that on an overall basis, the overloading of equipment has slightly improved over the last year i.e. 2015-16 when the supply of electricity was constrained. With more supply available now, the system is expected to meet suppressed demand, which was not connected to the network earlier. Therefore the government must realize that a routine historical pace of improvement and refurbishment in the network would not ensure provision of reliable electricity supply to consumers
The new government will finalise National Electricity Policy and National Electricity Plan for future development of electricity generation, transmission and distribution sectors. The National Electricity Policy would also provide a road map for the market structure.
The Power Division is preparing a white paper on the sector to be presented to the new government, aimed at putting the real picture of the sector in front of the new executive to enable them to take informed decisions.
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