While strongly criticising the power sector reforms that are under implementation, Water and Power Development Authority (WAPDA) has demanded improvement in governance in distribution companies (DISCOs). WAPDA has also called for enhancing accountability in lieu of increasing the already towering power tariff as the revenue gap could be filled through improving their efficiencies, says the entity’s presentation on the energy issues for the National Assembly Special Committee on energy crisis.
PRESENTING TNT
The presentation could not be made on Wednesday, as the members were not interested in listening to usual presentations. The presentation contains fireworks that could have ignited the committee into grilling the Ministry of Water and Power (MOWP) on its poor planning and implementation on the power sector reforms which is holding the economy hostage.
ROLE REASSIGNMENT
Demanding reassignment of the role of integrated power planning, development and transmission to WAPDA as it has mandate under the WAPDA Act, to prepare centralised plans for development of power in hydel, thermal and renewable energy resources including those dealing with transmission lines. PEPCO should not be saddled with the responsibility of establishing new thermal power plants in the public sector as it neither has the mandate nor the planning and implementing departments to undertake these activities.
RESTRUCTURING AND DECLINE
Government had started the restructuring of WAPDA, in early 1990s, with the vision that the break-up of its various departments and decentralisation will make management more effective however it has not materialised. WAPDA’s Power Wing was replaced by PEPCO, whose top management exercised the same centralized control over DISCOs. Criticising the boards of directors of DISCOs, it says they have failed to contribute significantly to the improvement and functioning of these companies. The quality and effectiveness of some of its key departments have deteriorated alarmingly. The Power Planning department, under NTDC, is a particularly example of decline in standards. CPPA has not become fully functional despite the lapse of a significant period since its inception. The operational and financial sustainability of PEPCO appears to be seriously threatened unless immediate remedial measures are taken.
LACK OF VISION
On the circular debt, it says even though it has been cleared many times during last four years, it reemerges as PEPCO’s monthly revenues fall, short of its expenditures by Rs20 billion per month. This is unsustainable and the existing revenue gap is solely because of the mismanagement and flawed implementation of the reform program. Criticising the government on its lack of vision, it says by picking up bank loans for revenue gap of Rs300 billion, the government paid tariff differential subsidies of Rs470 billion since 2007 to PEPCO. Despite passing on fuel price impact by making almost 100 per cent tariff increase, the gap between revenue and the cost is still not narrowed.
GROSS MISMANAGEMENT
Illustrating the gross mismanagement in generation companies (GENCOs), it says, due to poor maintenance, they were producing almost six billion less units per annum than their optimum level. GENCOs are burning more fuel worth Rs11 billion per annum more than normal efficiency level. NTDC is losing power worth Rs6 billion per annum in transmissions because of losses more than the normal standards. HESCO, PESCO, QESCO and MEPCO compositely are losing power worth Rs90 billion per annum in the distribution system. These DISCOs are also not recovering revenue of almost Rs 90 billion in a year. These are the real reasons of existing circular debt which has paralysed the national economy and has made the life difficult of a common man.
RECOMMENDATIONS
It recommends, the MOWP must recognise that PEPCO is a transitory entity meant to prepare DISCOs and GENCOs for privatisation. They should facilitate PEPCO for its strategic objectives only. Day to day management of company’s business affairs should not be a ministerial concern. For improving DISCOs performance, it asks for taking provincial government boards so that they are administratively involved in controlling line losses and to improve revenue recovery from consumers. To ensure better collection and delivery of services, the selected inefficient feeders of DISCOs should be leased out. Differential tariff must be implemented without taking into account the administrative losses and poor revenue recovery. The basic issue of most of the DISCOs is poor governance and limited accountability. There should be no political and administrative interference in DISCOs. GENCOs must be leased out. PEPCO has deviated from its given role, therefore must be rolled back to avoid further deterioration of performance of ex-WAPDA entities. The available energy must be consumed prudently and its industrial consumption should be preferred.
:))
Comments are closed.