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Is WAPDA's demand justified?

It must improve efficiency and reduce T&D losses rather than asking for tariff increase

June 18 - 24, 2001

It is interesting to note that whenever WAPDA filed petition for tariff hike these were resisted by consumers but NEPRA was kind enough to allow the increases in the past. The same has happened when WAPDA's latest petition for 75 paisa/kwh came for hearing. The previous decisions have seriously jeopardized the autonomous status of the Authority and it was considered to a 'rubber stamping' entity. However, it is expected that with a new Chairman, Justice (Retired) Saud Jan, the Authority may succeed in removing this impression.

It is understandable that while filing the petition WAPDA would solicit a hike in tariff and cover up all its inefficiencies. However, it is clear that soliciting tariff hike on flimsy points is getting difficult. All types of consumers in general and industrial consumers in particular, who pay their bills in time, strongly believe that neither the utility has taken punitive action against defaulters nor its corrupt officials and employees but never misses a chance to rip-off good consumers.

It was a disgrace to all the citizens of this country when the Chief Executive of Islamabad Electricity Company alleged that all the categories of electricity consumers were involved in power theft. However, he ignored the fact that this theft is not possible without the connivance of WAPDA staff. Some sector analysts even go to the extent of saying that it is the WAPDA staff which induce consumers to pilfer electricity either by allowing 'Kundas' and/or tempering meters.

It was a unique feature that even the Planning Commission strongly opposed the proposed 75 paisa/kwh tariff hike demand of WAPDA. In its written comments, the Commission has suggested that WAPDA's petition was not maintainable and the utility should be directed to come up with a realistic approach. The Commission was of the view that proper disclosure has not been made by WAPDA in arriving at the fixed cost. The Commission also questioned loss figures as they appeared 'self generated'. WAPDA is not doing enough to reduce its losses and bent upon passing its inefficiency to consumers. The Commission was also critical of WAPDA's efforts in connection with recovery of outstanding dues. Total receivables which were Rs 50.8 billion in June 2000 exceeded Rs 52.64 billion till end March 2001 an addition of Rs 1.9 billion in nine months. If the utility recovers only 30 per cent of its receivables, it would have no need to increase tariff.

According to some sector analysts, WAPDA is nothing but a white elephant. Though, it was decided to privatize its power wing nothing has materialized in nearly three years. Its annual accounts were hardly made public and cost of generation remains a million dollar question. Over the last three years, most of the time, energy and resources were wasted in legal battle with the IPPs. During this long period hardly any effort was made to improve efficiency and optimize cost.

The biggest disappointing fact is that WAPDA is fast loosing its industrial consumers. In the recent past WAPDA was boasting surplus power but history proved the otherwise. Some sector analysts even go to the extent by saying that either the high ups in WAPDA and the Ministry of Water and Power are unable to read the writing on the wall or believe that no one has the common sense to understand their absurd rationalization.

These analysts also say that unless various ministries, public sector entities start paying their bills in time, WAPDA's financial condition cannot improve. They say that the circular debt issue has attained such a magnitude that it has started adversely affecting the economy of the country. All those, industrial consumers, who are intelligent enough have established their own power plants and have become least dependent on public sector utilities.

It has proved beyond any doubt that tariff hike only encourages electricity theft. Not because it cost more but because despite paying a colossal tariff industries cannot depend on public sector utilities. Consumers have also rejected the plea of utilities that lenders are responsible for tariff hike.

It will not be out of context to refer to massive load shedding by the KESC in its franchised area. It has caused not only losses to industries but a colossal dent to the economy. Therefore, the only solution is to privatize both WAPDA and KESC. The GoP must sell these entities without further loss of time. No financial restructuring can improve their financial condition unless core issues are resolved. There are many buyers of power generation and distribution companies. However, they certainly want a right to weed out corrupt element. Why the GoP wants the corrupt to flourish at national cost?