The federal cabinet finalised a number of short-term measures to overcome the power crisis on Wednesday, including two weekly holidays, closure of markets at sunset, closure of wedding/banquet halls by 10pm, staggered weekly holidays for industries, fixed subsidy amount for tube-wells in Balochistan and automatic cut-off of power supply after default of 45 days, but implementation of all these measures hinges on the support of the provincial governments, which will be sought at the Council of Common Interest (CCI).
Addressing a joint news conference with Water and Power Minister Naveed Qamar and Petroleum Minister Dr Asim Hussain, Finance Minister Dr Abdul Hafiz Shaikh said on Wednesday that all the suggested measures would be implemented immediately by the federal government but their enforcement at the provincial level would be achieved after the consent of the provincial governments at the CCI. However, he added it was also decided that key branches of all banks would be exempt from the two weekly holidays. The government estimates the measures would save some 1,500 megawatts (MW) of energy.
He said the cabinet was briefed in detail by the Cabinet Committee on Energy about the causes of a massive tariff deferential subsidy of over Rs 1 trillion in the last three years. He said the power demand had risen to 19,000MW while generation was at 14,500MW. The shortfall of 4,500MW would be bridged by energy conservation measures, he added. On the major issue of subsidy for tube-wells in Balochistan and consumers in Azad Kashmir, the cabinet told the ministerial committee to hold talks with the respective governments to find a solution. Shaikh said tube-wells in Balochistan operated without metres and it was decided that instead of unlimited subsidy, they would be metered to provide subsidy for a certain amount of units.
UNIFORM TARIFF: Calling the determination of tariff “a complex issue”, Shaikh said the cabinet had decided that only one application would be filed for tariff determination and a uniform tariff would be implemented, which would end the tariff differential subsidy.
This, however, is in stark contrast to the reforms that call for a differential tariff to lower the transmission and distribution losses of distribution companies (DISCOs), which are allowed only 16 percent of losses per year, while their actual losses are well over 19 percent, which translates to around Rs 24 billion in losses every year. The recovery rate of 88 percent by the DISCOs adds up to another Rs 70 billion per year in losses.
The minister dodged a question on increase in power tariff, saying it was not discussed, but elimination of the tariff differential subsidy means that the power tariff is bound to be significantly increased in the near future.
PRIVATE SECTOR: Admitting that DISCOs had failed to properly bill and recover dues, the minister said the private sector would be included in the billing and metering of power consumption. He boasted the cabinet had ordered to cut off power supply indiscriminately in case of failure to pay bills, even if it was the president, prime minister or army chief. All the federal government and provincial departments would have to clear their electricity arrears as they had budget allocations for bill payment, otherwise their power supply would be cut off too, he added. The arrears of government departments alone were over Rs 170 billion out of the Rs 300 billion outstanding dues of the Pakistan Electric Power Company (PEPCO).
Water and Power Minister Naveed Qamar said PEPCO would be dissolved by the end of October. Professional management would be inducted into DISCOs and GENCOs and their salary package would be based on performance contracts. He said foreign companies would be hired for the operation and maintenance of GENCOs. He said an addition of 1,500MW through independent power producers and 1,000MW through wind power would be made to the national grid in the next 18 months and the process would be expedited.
He said the programme for the replacement of ordinary bulbs with energy-savers would be completed by June next year. The cabinet also endorsed a proposal to adopt light-emitting diode (LED) technology.
In his address to the cabinet, Prime Minister Gilani highly appreciated the efforts of the energy committee and asked for a financial plan for improvement in electricity generation and an improved load shedding plan in the next cabinet meeting.
