The Ministry of Petroleum and Natural Resources has told the Ministry of Water and Power to stop supplying furnace oil, diesel and gas to inefficient power plants, saying that it is just wastage of precious national resources. According to senior petroleum ministry officials, Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi has written a letter to the Ministry of Water and Power suggesting that fuel supply to inefficient power plants should immediately be cut and diverted it to efficient power plants.
The official sources said that the country was facing serious issues of power bills recovery, which during past one year have come down from 82 percent to 75 percent from public sector entities' recoveries have massively reduced, which is creating serious problems for maintaining the fuel supply chain intact.
"These plants have completed their life and should not be used instead of supply gas and other fuels to these plants we should supply this fuel to efficient plants like Orient, Halmore, Saif and others which have over 50 percent efficiency, " the sources added. Gas distributing companies - Sui-Northern Pipelines Limited (SNGPL) and Sui-Southern Gas Company Limited - are supplying 450 million cubic feet per day (MMCFD) of gas to captive plants of industrial units, depriving efficient power plants of the scarce resource. The gas supply to some of the efficient plants with a combined power producing capacity of 800 megawatts since 2011 remained suspended, while most of the inefficient power plants with 30 percent efficiency keep getting gas all the year.
A terribly inefficient power transmission and distribution system at present is causing losses of 23 to 25 percent due to poor infrastructure, mismanagement, and theft of electricity. The cost of delivering a unit of electricity to the end consumer has been estimated at Rs 14.70 by the NEPRA. This means that the inefficiencies are costing the taxpayers additional Rs 2.70 per unit over and above the cost of generation (Rs 12). The Ministry of Water and Power has estimated the true cost of delivering a unit of electricity to the end consumer at greater than Rs 15.60 per unit after taking into account the collection losses and the real losses to the distribution companies. If the system assumes the NEPRA suggested transmission and distribution loss of 16 percent, the theft alone is estimated to cost the national exchequer over Rs 140 billion annually.
According to NEPRA, the aforementioned inefficiencies, theft and high cost of generation are resulting in debilitating levels of subsidies and the circular debt. Reducing these losses would lead to significant improvement in the bankability and profitability of the sector, and could be used to improve the efficiency of the power system/network as a whole. The limited and crumbling transmission system in the country has created serious issues of access to electricity, particularly in Balochistan and other far flung rural areas of the country.