With politicians and bureaucrats joining forces to create hurdles in the way of power sector reforms, the technocrats in the government have decided not to release any funds to the power sector until key structural reforms were implemented, including a change in the management of power sector entities.
A highly-informed source privy to the developments said the situation was so bleak that no amount of financial injection in the sector was likely to improve the situation, unless and until the key players managing the power sector entities were replaced with competent professionals followed by swift privatisation of all power sector entities. He said power was being generated at Rs 10.5 per Kwh and the tariff determined by the National Electric Power Regulatory Authority (NEPRA) was Rs 9.40 per Kwh, while politicians, for obvious reasons, were notifying its implementation at Rs 7.83 per Kwh. The matter had been made worse by the distribution companies (DISCOs), which were collecting it at Rs 6.42 per Kwh. The total power generation purchased by Central Power Purchasing Agency (CPPA) was close to 92.1 Twh, while the electricity sold was 74.9 Twh. The Pakistan Electric Power Company (PEPCO) was recovering dues only for 80 percent of the sold electricity and the remaining was ending up in the circular debt. The government is incurring losses of 2.5 percent of the GDP in power subsidies alone, while electricity shortages were causing a loss of three percent to the GDP. During the last three years, the government had picked up Rs 1 trillion in losses from the power sector. The repeated attempts of technocrats to replace managements of DISCOs and GENCOs with professionals have been thwarted by politicians and bureaucrats. Professionals mean no commissions in procurements, no obliging in awarding contracts and no jobs for cronies. The public servants, having no business background, could not manage companies worth billions of rupees, the source said. “They cannot even come up with a proper business plan for the entities. There is no wisdom in injecting money in the sector, as the circular debt will pile up again within months,” he said.
