A subtle turf war is continuing between four key ministries in the ongoing ministerial committee on energy crisis, with the ministries shying away to ease their control over their subordinate entities and consensus being reached over one point only: there’s no solution yet to control the spiralling Rs 400 billion circular debt. An official source said the ministerial committee had only been successful in sensitising the ministers with grave conditions of the power sector that have weighed down economic growth for the last three years.
However, the solution of the circular debt and bringing the system to smooth run would require more brain storming, the source said. Observing the grassroots levels of the circular debt, the committee discovered that tariff determination by the National Electric Power Regulatory Authority (NEPRA) and tampering with the implementation of the determined tariff by the government were adding Rs 20 billion per month to the circular debt. The committee found that tariff determination by NEPRA had loopholes, as it did not take into account the full picture.
NEPRA determined tariff for every distribution company (DISCO) and then finalised the amount of line losses not be passed on to the consumers. The huge line losses left to be accounted for by DISCOs ultimately reflected in their balance sheets in the form jacked up liabilities. The government then intervenes and instead of letting the implementation of differential tariff, asked for a uniformed tariff across the country, the source said. “Since the government has no surplus money, the differential ends up in the monthly subsidy.
The problem gets further compounded when DISCOs do not get timely recoveries from government departments,” he added. He said the committee was urged to give administrative and financial autonomy to DISCOs, which were practically under the administrative control of the Ministry of Water and Power and financially managed by the Finance Ministry, as it controlled all monetary releases to them. The Planning Commission stressed on the need for induction of professionals from the private sector, which the Ministry of Water and Power termed a half-baked solution to the complex problem, the source said.
“The available choices are that the govt abstains from intervening in the implementation of determined tariff and NEPRA reviews its tariff determination mechanism, which needs significant increase, along with a lesser passing on of the impact of line losses to DISCOs. The govt already faces a difficult situation as its wants to retain subsidy at the budgeted level of Rs 50 billion, which is not possible without increasing power tariff,” the source said. The two percent surcharge on power bills cannot be extended from May this year as the consumers have challenged it in court. The govt had earlier agreed with the IMF that 20 percent increase in power tariff would be made on two percent basis gradually during the current fiscal year.
The committee was told that the govt should tax various other fuels on the basis on petroleum levy, like surcharge on CNG and LPG and withdrawing the gas development surcharge from the provinces that could generate close to Rs 100 billion during the current fiscal year.