SINDH ASSEMBLY FOR RETAINING POWER SUBSIDY

TARIQ AHMED SAEEDI (tariqsaeedi@hotmail.com)
July 06 - 12, 2009

Sindh Assembly has passed a resolution unanimously against possible withdrawal of subsidy on power. The resolution approbated by both ruling and opposition urges federal government to retain subsidy provided to the province on electricity. The removal of subsidy would cause substantial escalation of electricity tariffs and for electricity consumers who are already receiving inflated electricity bills despite long-hour load shedding, this would be a last straw on camel's back.

It was decided that federal government would be convinced to scrap its plan of withdrawal at this crucial time when people are being adversely affected by contracting buying power and power crisis crumbles production in industries. While a parliamentarian has indicated government's discretion on executing a final decision, yet arising circumstances related to budgetary deficit may effect in clawback. Particularly, when government needs to scratch monies to keep fiscal deficit at target, Rs40 billion given in lieu of power subsidy looks a significant amount to be avoided by the government. Even though, this avoidance is all necessary and obligatory for the government for it pathetically has exhausted in facilitating public with basic utility and lost its dignity to regression of electricity generation and distribution companies-shortfall is consistently on rise year on year and so are technical faults. Except one, though all comes under direct control of the government, no one is efficient to ensure uninterrupted electric supply to commercial, non-commercial, and industrial consumers.

Though International Monetary Fund has lifted its hand from a possible decision of withdrawal of power subsidy by apparently relegating the decision-making authority to Pakistani finance mangers, the Fund itself showed this way to the government of Pakistan to claw back revenue, in a way choking multilateral thinking of bureaucrats to earn from other sources. Be that as it may, unrealized sales taxes and other taxes from PEPCO and WAPDA, which kept a hole of over Rs12 billion in net revenue receipts of last fiscal year, may not dither plan of subsidy removal for long, as government would vie for fiscal space during the current financial year. Even if that may not happen, power companies would likely to revise upward electricity tariffs by giving an excuse that cost of generation thermal electricity is increasing because of high furnace oil price, which has scaled up recently. Furnace is a second most consumable fuel of producing power after gas in the country. So, in any case the consumers would suffer another wave of price hike. Retaining subsidy can redeem tariff rise, however. Subsidy withdrawal leads to an average 17 percent increase.

Power crisis is becoming a government's nemesis, as nothing on ground government has materialized to hold back the mounting shortfall of electricity demand and supply, unleashing a barrage of power outages across the country. Neither, noteworthy additional power is mainstreamed to national grid in past one and half years, nor any mega project was completed. We are listening only rhetoric with no substance. Keeping a new project apart, government would have saved many industries from having collapsed, public properties from being ransacked by outage-affected mobs, and lives through vigil on administrations of public utilities. Electricity load shedding is not always an outcome of technical faults, rather sometimes deliberate underproduction results in to shortfall. Minimal capacity utilization of power plants makes costs of fuel minimum, according to a source. When supply is at low price from IPPs and WAPDA, and other sources, in-house combustion is irrational, he said. "Load shedding is a retaliation to power theft."

In a national assembly session on Tuesday, Haider Abbas Rizvi, MQM MNA raised an objection on rise in electricity tariffs, saying that although people of Karachi are enduring long-hour unannounced electricity load shedding, they are facing hard billows of high tariffs of electricity every month. Reportedly, he called for a debate on the issue of power crisis and electricity load shedding and proposed stay of subsidy on power. The house accepted his invitation for discussion. Replying to point of orders, Minister for Parliamentary Affairs, Dr. Babar Awan suggested government's intention that government might retain subsidy for power until electricity load shedding has fizzled out completely. However, his statement should not be taken in absolute term as he hinted at middle of road the decision of subsidy removal was on.

Specifying power crisis in the city of Karachi, he warned KESC management of strict action if it fails in proper service delivery to electricity consumers. He said members of parliament would be taken in to confidence before any final decision regarding subsidy. This clearly shows sore reactionary approach of the government since the government waits for a major setback before it realigns its priorities of allocations. If government thinks that other financial supports redeem removal of subsidy, why it is prolonging its action? Go and remove the subsidy and weigh the action against accompanying costs, though the exercise is overdue and so is the attempt to reduce line losses, which now Dr. Awan considers underlying cause of load shedding in Karachi.

Electricity pilferage has been longstanding issue in the country, however, its intensity is blatantly pronounced in country's industrial city where power theft in industries is as common as in squatter settlements promoted by the hegemonic politics of vote bank. Now he must question why is an exorbitantly paid private team still crushing its fingernails to minimize avoidable technical losses and why is the private company closefisted in improving production capacity and curbing line losses whilst it is generous in paying stocky remunerations to its executives and officers.

Poor and frailer governance and administration system is incapable of, or lethargic in, detecting unpaid consumption of electricity in industries, slums, and too in established residential areas with the connivance of staff. The public reps did not expect such an abysmal weakness of private management, and therefore, are seeking whereabouts of its international expertise in rejuvenating electricity generation and supply system in Karachi. Private management took over management of production and distribution of electricity around the metropolis and has left public sorely disappointed over its performance.