ELECTRICITY DOWN THE DRAIN

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)
Oct 24 - 30, 20
11

Power crisis has been disturbing the lives of peoples of Pakistan since last three years. Unquestionably, the government has lost control of sagging power sector as it has found itself unable to plug the prime drain on electricity-abnormal line losses.

Average 30 to 40 per cent electricity is wasted or not billed due to inefficient power management system including crippling transmission and distribution infrastructure and uncontrollable and patronized electricity thefts.

As per the government's definition, one percent line losses signify the wastage of 100 megawatts of electricity right away and that in value amount are equivalent to five billion rupees. A simple multiplication brings total loss in volume to 3,000 to 4,000 megawatts and in value to Rs150 to Rs200 billion.

The figures were presented by the minister of water and power last year at a press conference. If one factors inflation into them, the final estimates are to swell up without doubt.

The implication of this huge loss evidently leads to uncontrolled load shedding, frequent rise in tariffs, and further infirmity of overall power system.

Total power production is not enough to meet the demand in the country. According to Pakistan electric power company (Pepco), current electricity shortfall stands near 2,300 megawatts. Due to wide supply and demand gap, loan shedding is being carried out across the country.

The government has failed to improve the health of the generation companies that are running on mere 60 per cent of their production capacities. They are not able to produce sufficient electricity required to meet the national demands and passing through the straitened times. The government could not improve their financial health since perhaps healing dose is not sufficient to cure the bleeding generation sector bruised from top to bottom.

Mismanagement and poor governance are the shared hang-ups of power generation and distribution sector. While generation companies known as gencos give poor performance in electricity production, distribution companies (discos) are bereft of ability to ensure proper supply. Recovery of dues is a challenge for them. Even for Karachi electric supply company (KESC), which is plus 75 per cent owned by the private management, full recovery is not possible. The reasons are strikingly similar: poor infrastructure and unpaid units.

Involvement of staff in power theft has been reported many a time. It is an open secret that the employees encourage consumers to steal electricity in return of backhanders or hush money.

Investments are slowly and poorly flowed into the sector from both the government and private sides. Whatever have been invested in for example setting up plants have not served the purpose because of mismanagement.

Until power plants remain new, they give full production. However, as time passes they start to lose efficiency owing to lack of maintenance. Experts said if only the government ensures timely repair and maintenance of these plants, it could reduce electricity deficit to larger extent.

News are doing round in the media that the government is planning to transfer management control of some of the gencos currently managed by water and power development authority (Wapda) to private parties. The government is said to reach the decision under the obligation of gencos' rehabilitation programme of Asian development bank (ADB). The multilateral development bank is running an over a billion dollar financing facility to improve the efficiency of generation companies.

A bungling system starting from production right up to supply to consumers is responsible for the present state of power sector. From bottom up, consumers do not pay as much as they consume or suppliers or generators do not meet cost of production due to supply faults (technical and human). Consequently, suppliers or generators could not foot the bill of independent power producers or fuel suppliers. They, as a result, could not make payment of receivables of oil refineries and gas utilities. This whole vicious circle is called circular debt. A default leads to breakup of entire chain of functions.

The victims are genuine payers of electricity bills who have to pay the bulging electricity tariffs through the nose whereas non-payers are least bothered of public sufferings at large. Critics said had the previous government allowed increase in tariffs, the pressures would have not been unbearable for the consumers today. Swelling fuel costs at that time merited push in prices of electricity units.

Distribution losses due to power theft and technical reasons are common in all parts of the country. Infrastructure is poor nationwide. Power thefts are blatant in all industrial cities.

Ironically, utilities seem to have found out strange way of dealing with power theft part of transmission and distribution loss (T&D). Excessive billing, meter tempering, and using of other illegal means of compensation of losses by the power sector are commonplace nationwide. In Karachi, domestic, commercial, and industrial consumers have been registering the complaints regarding these since the privatization of KESC.

KESC was privatised for the purpose that the private company would put in its resources to revamp the rickety power infrastructure of the country's largest city. The Middle East equity goliath Abraaj boasts of its constant investments in the sector since its buyout of the utility's 72.4 per cent shares in 2008. The ground reality stands against the claim however. When the company bought KESC from Saudi group, line losses averaged around 40 per cent. And, for now they came down just about to 35 per cent.

The company was expected to control the situation within one or two. It has been almost three years and nothing commendable has surfaced. In fact, power woes continue to exacerbate with power thefts continuing unabatedly and overall line losses measly declining.

Managing electricity affairs of the financial and capital hub of the country is not the job of single integrated company. More such companies or independent suppliers should join forces with the existing player to ensure the desirable energy generation and supply.