Energy sector in the doldrums

The presidential ordinance is not sufficient to address the increasing circular debt, unabated load shedding and the power theft being perpetuated with the collusion of the WAPDA authorities

The president of Pakistan has approved an ordinance to curb power theft. It prescribes a fine of Rs one million to 10 million and/or two to seven years imprisonment for an individual found responsible for electricity theft. It is extremely outlandish that the punishment and the fines are only for power theft individuals — the power consumers — but it seems the real power thieves — the WAPDA authorities — have exemption from punishment. 
The fact is that electricity theft is not possible without the involvement of officials from power companies. Lahore Chamber of Commerce and Industry (LCCI) President Sohail Lashari, commenting on the presidential ordinance, said, “Electricity and gas theft are not possible without the connivance of the staff of the concerned departments.”
Prime Minister Nawaz Sharif, soon after taking office, formulated a task force under the Federal Investigation Agency (FIA) to crack down against power thieves. The task force failed to bring the desired results of reducing power theft. The linesmen, SDOs and XENs have played a major role in making the FIA anti-power theft raids unsuccessful by informing illegal power consumers in advance regarding an FIA crackdown. They are involved in getting fixed monthly payments from illegal electricity clients. They have even been found persuading the customers not to have legal electricity connections to avoid hefty bills and to just pay them monthly fees.
The 2013 election manifesto of the PML-N about the energy policy said, “The PML-N has a clear energy vision to ensure that gas and electricity can be supplied to all urban and rural consumers at an affordable price. The PPP-led coalition has almost doubled electricity prices in the past five years to eliminate subsidies but, because of poor governance and the inability to improve the efficiency of the energy sector, the line losses have actually increased and the energy crisis has become more serious. The energy companies have been unable to recover their full dues (arrears estimated at Rs 499 billion in 2012) or reduce theft of electricity.”
The PPP and its coalition government doubled power prices within its five-year tenure but the PML-N government has done that within five months of its government. It has raised the power tariff by 72 percent, from Rs 8 per unit to Rs 14 for the domestic consumers between 200 and 300 units and Rs 16 per unit from the previous Rs 12.33 for consumption of 301 to 700 units. Pause for a moment and ask yourself whether the PML-N has made power affordable for all with that massive tariff increase or have compelled consumers to contact ‘honourable’ power sector officials who provide illegal connections for monthly payments.
Let us review power unit prices in neighbouring countries such as Bangladesh and India. The Dhaka Electricity Company provides per unit at Rs 4.88 and the Indian Central Electricity Authority at Rs 6.88 for units consumed between 201 and 300 against Rs 14 for the same units in Pakistan. Bangladesh charges Rs 4.93 per unit and India Rs 7.38 for units used between 301 to 400 against Rs 16 per unit in Pakistan.
The PML-N swept the May 11 polls with empty promises by Chief Minister Punjab Shahbaz Sharif, who made speeches of ending load shedding within six months of the PML-N government. The masses thumbed the tiger, thinking the words of the politician to be true. Now the nation sheds tears against the huge rise in the power tariff and more than a half-day of daily load shedding. Nawaz Sharif, after taking oath as prime minister, disowned his brother’s given power deadline of six months by likening it to just an emotional speech. The power sector circular debt has reached Rs 500 billion for the first five months of 2013-14 fiscal year by increasing Rs 590 million a day. The default stands at Rs 88 billion of which Rs 46 billion are from private sector consumers.
The presidential ordinance is not sufficient to address the increasing circular debt, unabated load shedding and the power theft being perpetuated with the collusion of the WAPDA authorities.
The approved estimated cost of the Neelum Jhelum power project of 969 MW was Rs 84.5 billion but delays, mismanagement and corruption have now put the project’s total cost with four-fold increase at Rs 321 billion. Our government does not appear serious in addressing the power crisis turning from worse to worst since 2005. The power crisis is being remembered just during the polls campaigns to fool the masses. The electricity outages are not a scourge only to the domestic consumers but are a real challenge to the industrial sector and all forms of business. Pakistan can never progress on the economic front without overcoming the energy crisis. The world’s countries heavily rely on coal-fired power, wind and solar energy but Pakistan depends on costlier oil, gas and environment-dependent water. China, India, Kazakhstan and the US produce 79, 68, 75 and 45 percent electricity from coal respectively. And Pakistan produces 0.1 percent from it. According to Competent Persons Report (CPR) by RWE, Germany, Thar coal’s block II (slightly over one percent of the total reserves of 175 billion tonnes coal) contains two billion tonnes of lignite and is exploitable to produce 5,000 MW for 50 years. India, Germany, Spain and the US produce 7,093 MW, 21,283 MW, 13,400 MW and 12,934 MW wind energy respectively. Pakistan has a corridor between Gharo and Keti Bandar to produce wind energy between 40,000 MW and 50,000 MW. The energy sector is in the doldrums and needs more concrete steps than a presidential ordinance to solve the power crisis so as to make electricity affordable for all.

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