LAHORE: Emphasizing the urgent need to address line losses and electricity theft, the Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) has cited its detrimental effects on the national economy and stressed the need for overhauling the power sector through some drastic measures as the total cost of inefficiencies in the power sector is constantly escalating.
The FPCCI former president and BMP Chairman Mian Anjum Nisar said here on Sunday that the Discos to leverage technology and innovation in their efforts to eradicate power theft, as the objective should be to curtail indiscriminate power outages, especially to consumers who diligently pay their bills. He asked the government that that all obstacles hindering efforts to prevent electricity theft must be removed, warning that employees and officers involved in such illegal activities should be dealt with firmly and decisively.
He also demanded that there should be no political interference in the campaign against electricity theft. He stressed that decisions should be made based on merit, ensuring a transparent and impartial approach.
Mian Anjum Nisar stated that the circular debt crossed Rs 4 trillion after an addition of Rs 400 billion during the current fiscal year. In the present scenario, energy efficiency and conservation are the key measures taken by countries across the globe to mitigate the associated risks. However, in the case of Pakistan, both energy efficiency and conservation are generally treated as alien concepts,” he stated.
The BMP chairman stated that the circular debt stock has crossed Rs 4 trillion after Rs 400 billion were added to it during the current fiscal year.
He said that in present scenario the energy efficiency and conservation are key measures used by countries across the globe to mitigate associated risks. However, in the case of Pakistan, both energy efficiency and conservation were generally treated as alien concepts.
He noted that there was an urgent need for up-gradation of energy efficiency and conservation standards and strict enforcement, besides replacement of inefficient appliances and consumer awareness for responsible use of energy were other key areas which should be identified for action as a national priority. He estimated that a dollar outflow of around $ 1.25 billion could be potentially saved annually through implementation of efficiency and conservation measures.
The Chairman said that the government is not ready yet to undertake structural reforms related to circular debt and management of state owned enterprises. Moreover, reliance on indirect taxes for meeting revenue goals is also a major issue meaning thereby that government should improve its taxation system if it wants to create a business friendly environment.
Since 2013, we have been adding capacity by persuading companies that they will get payments against capacity addition regardless of whether the electricity is sold or not. This condition may have been the ground realty of that time when the country needed more capacity and this was the only way of gaining investors’ confidence but now the policy should be revisited. Capacity payment is fixed while the energy price varies. Imported fuel is another reason for the circular debt. Besides, all payments including the capacity payments are linked to the US dollar. As a result, when the rupee loses value, the burden of circular debt rises.
Besides, transmission losses and bill recovery failure are contributing to the liability as the GDP rate decreases with the increase in cost of electricity. Anjum Nisar pointed out some key areas that should be taken up for action as a national priority. These include up-gradation of energy efficiency and conservation standards, replacement of inefficient appliances and consumer awareness for responsible use of energy. He estimated that dollar outflow of around $1.25 billion could be potentially saved annually through the implementation of efficiency and conservation measures. He emphasized that theft and line losses should be addressed through advanced metering and cabling, citing that line losses ran as high as 9% over and above the percentage allowed by the National Electric Power Regulatory Authority.
Pakistan’s economy has been affected by external conditions like spill-over of the Ukraine war, domestic challenges and accommodative policies that resulted in uneven and unbalanced growth. Steadfast implementation of corrective policies and reforms remain essential to regain macroeconomic stability, address imbalances and lay the foundation for inclusive and sustainable growth, chairman recommended. The sector needs to be deregulated, as nothing can work unless Discos are truly empowered, he suggested. He asked the government to shut down all expensive oil-based power plants to ensure availability of cheaper energy for consumers. He condemned the National Electric Power Regulatory Authority for shifting power distribution companies’ inefficiencies’ burden to the consumers by jacking up the tariff for the months of March and Feb. He said that constant hike in power tariff on the plea of fuel adjustment has pushed the electricity prices higher and added to the already soaring cost of trade and industry. He lamented that the previous government did not pay heed to rehabilitation and maintenance of old power plants which caused several system constraints, inflicting heavy losses.
Copyright Business Recorder, 2024