Woes betide the power sector as a cut of 50 million cubic feet per day (mmcfd) was made on Tuesday against the allocation of 175 mmcfd to the power plants, which has ousted supply of 300 MW from the system. An official source said the Ministry of Water and Power (MWP) was not informed by the petroleum ministry about the shutting off of the gas supply. He said if there was any need to cut off the supply, it was more prudent to stop supply of 50 MW to the ghee sector. To reduce the power subsidy, which is estimated to be over Rs 512.2 billion against the budgetary target of Rs 166.4 billion this fiscal year, MWP is demanding more allocation of natural gas for power generation. This would have reduced the inter-DISCO power tariff differential subsidy which is estimated to be around Rs 412 billion during the current fiscal year. MWP proposal demanded gas supply of 350 mmcfd from the CNG sector to be diverted to power sector. However, the government agreed to supply additional 207 mmcfd to the power sector at the energy summit but actually supply was only 175 mmcfd. The MWP was demanding gas for four highly efficient IPPs that require 38 mmcfd each to produce a total of 800 MW. To end the tariff differential subsidy and circular debt, MWP had sought an allocation of 900 mmcfd for the power sector. But it was opposed by the petroleum ministry on the grounds that it was in no position to make further gas allocation considering the supply constraints. The government, source said, was still undecided due to the political considerations on the proposal that sought hiking the gas tariff for the captive power plants to bring its cost of production nearer to the determined power tariff of Rs 12 per unit as compared to their present generation cost of Rs 4 per kWh. If the government did not firm up its political will to implement power sector reforms and end other distortions in the sector then the power subsidy alone would be more than Rs 500 billion in the next fiscal year, he said adding that the circular debt will increase and no donor will be ready to pour its money. The government has also failed to induct professional management in the power sector. Finance Minister had announced in October last year to complete the hiring process for professional management within a month to expedite the reform process. The government has also failed to implement recommendations of the energy summit as markets are not being closed at 8 pm. Implementation will result in saving of 1400 MW during peak hour load. The demand side management is needed in the short term to counter the long black outs at night.
