On 17 October 2011, Minister for Water and Power informed National Assembly that the “line losses” of Sukkur Electric Supply Company (SEPCO) and Peshawar Electric Supply Company (PESCO) have reached 40.2 per cent and 35.25 per cent, respectively. Other distribution companies in the champion’s league of power pilferage are Hyderabad at 34 per cent and Quetta at 21 per cent. Multan takes the lead among the distribution companies in Punjab with line losses of 18.3 per cent.
When Federal Minister responsible for this sector admits to such a massive hemorrhage of billable power supply, one does not expect his statement to end there. If you are idealistic, you expect a resignation to follow this admission of failure. At the very least, you expect a plan of action with specific outcomes and time lines. Minister assures us that “The government is cognisant of the situation”. He also gives us glad tidings that the “Culture of generation and distribution companies would change”.
Meanwhile, political masters as well as NEPRA, the regulator, continue to play this game of make believe. In financial year 2010-11, for example, NEPRA prescribed a target of 16.5 per cent as cumulative line losses of all distribution companies. The actual losses were 19.6 per cent, with “healthy” growth of 7.2 per cent in PESCO, 5.8 per cent in HESCO and 3.35 in MEPCO.
The story of shameful complicity and inefficiency does not end here. After having lost one fifth of this very valuable resource to theft, the remainder is billed. Believe it or not, distribution companies fail to collect 11.5 per cent of the billed amount, which comes to a massive Rs67 billion in one year.
The bottom line is that PEPCO and its distribution companies are incompetent as well as complicit in leakage of more than 30 per cent of their revenue.
You have the right to ask, how government of Pakistan penalises the companies and consumers who are responsible for causing these losses? The answer is that it does not punish them. On the contrary, they are rewarded. What happens is that for the determination of tariff, the performance of most efficient distribution company is taken. Currently, this means Islamabad Electric Supply Company, which has line losses of 9.8 per cent and a recovery to billing ratio of 93.4 per cent. Tariff is worked out for IESCO and this becomes the uniform tariff for all distribution companies; the good, the bad and the ugly. The deficit this creates is picked up by the government as power subsidy. Over the three years in which the present government has been in power, nearly one trillion rupees has been poured into this bottomless pit.
Such mismanagement of generation, distribution and tariff determination; all embedded in a bedrock of corruption is more than scandalous. But unfortunately no one, not even Punjab’s Chief Minister, seems to be moved by the grinding burden which this is imposing on the middle and lower income masses. The “Khadim-e-ala” gets galvanized into action over trivial issues, but he is unmoved by half the industrial output of the province being lost to power shortages and loadshedding of natural gas only in the Punjab province. This has been done on the dubious plea of a constitutional provision casually sanctified by the province’s consent through the 18th Amendment. In contrast, Sindh and Khyber Pakhtunkhwa used the pretext of this provision to secure stay orders against gas curtailment in their provinces from their High Courts. Is Ministry of Petroleum is making any efforts to get such parochial orders vacated? Is Chief Minister Punjab agitated over a measure which is stifling commerce and industry in this province? Strangely enough, he is not.
During the Pak – US strategic dialogue on energy in Washington last month, the Pakistani team led by Mr Naveed Qamar, Minister for Water and Power, disclosed that Pakistan’s economy suffers a 3 to 4 per cent loss of GDP per annum due to electricity shortages and subsidies, besides the 10 per cent increase in unemployment. We only have to add this 4 per cent to our projected GDP growth of 4.2 per cent for the ongoing financial year to realise the magnitude of the opportunities which we are missing on account of our poor governance.
Our experts added that they were going to introduce some vital changes in the new tariff determination formula according to which, the government will include 100 per cent line losses in electric power tariff determination. The callous injustice and insensitivity of this planned policy initiative is appalling. Instead of deciding upon measures to curb theft and technical losses due to inefficient distribution, the government is planning to make the consumers pay. A much more logical decision would be to make the distribution companies, such as FESCO and HESCO autonomous to sell power in bulk and to let them distribute and collect from consumers. The good ones will then get their efficiency dividend, while those throwing up huge losses on account of theft and inefficiency will have to pay for it.
Pakistan’s overall demand for power is estimated to reach 35000 MW by 2015, which will be more than twice of our installed dependable capacity, today. Every megawatt which has been added to the system over the previous 3 years was planned, approved and commenced during the tenure of the previous govt. Not a single new project (other than the notorious Rental Power Projects) has been approved by the present government and this will threaten the every viability of the country in the years to come.
The terrifying fact is that no one in power seems to care. There is no sense of urgency in the concerned ministries and political circles. No mechanism has been evolved to focus and propose solutions for the grave crisis that are confronting us today. Do I see any light at the end of the tunnel? As the cliche goes, all I can see is an on rushing express train.
