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Govt as the biggest power defaulter

The media is replete with news of the Power Sector – mostly negative. Most recently, it is the exorbitant bills being received by the people and the ensuing protests. Analysts are talking about the huge Circular Debt (CD) of upwards of Rs. 2.6 trillion – but all and sundry forget about the similar amount of the sectoral receivables. Unfortunately, these receivables of Rs. 2.2 trillion (as of May 2023) are normally never placed under the spotlight for possible amelioration.

A study of the official data for May, 2023 reveals that the biggest defaulter is Karachi Electric (KE) with a payable of Rs. 360 billion the second is the AJK government with Rs. 120 billion against its name, followed by the GOS with Rs. 36 billion and so on. The list of defaulters includes Rs. 71 billion as payable by both the federal and the provincial governments on account of their part of the bills against the Baluchistan agriculture tube-wells. All of these entities – all being governmental in context (inclusive of the KE dubbed as an DISCO in 2007 to the chagrin of all others and enjoying all facilities that go with this epithet, but ignorant of any of its obligations), owe a stupendous Rs. 681 billion to the Power Sector. The strange situation of the KE also requires us to think twice before any more privatization. The sad part is that no effort is being made to recover another Rs. 406 billion that the agriculturists owe to QESCO, while they are only required to pay Rs. 10,000/- per month for electricity usage. This is a classic case where the publicly owned utility is being put to loss by the owner viz. government, which itself is assuring that it stalls.

On the other hand, it is seen that the DISCOs are averse to disconnect governmental connections being basically strategic in nature (to the DISCOs all of the government is strategic for all intents and purposes), that most of such defaults pertain to other utilities like WASA, PHED, Municipal corporations etc. and which cannot operate without electric supply. The rest of the governmental connections are not disconnected as an equal and similar action would be in the offing for DISCOs. It was only a month ago that disconnection of water supply works of a cantonment board elicited issuance of an un-substantiated tax notice for the power grid’s lines and offices. WASA of course has the power of its sanitary trucks to un-leash its deadly cargo before the DISCO offices. In other words, the lawlessness that pervades the country is also true for the various governmental entities too and their dealings with other agencies. Entities like the police, other LEAs and like are simply out of reach for any enterprising DISCO official.

Why is it so. Why cannot the governmental electricity consumers behave like ones and then consider timely payment as a necessary act and nothing special. A little study reveals that due financial provisions are never made in the yearly budgets and thus necessary outlays are not available for in-time payment of the electricity bills. It is further seen that even if a particular departmental head wishes to pay the bills on time, mostly the required funds are not available. In other words, due provisioning is never made, and the budgetary outlays, if available, are not able to last the whole year. An in-depth study reveals that this is on account of high and ever-increasing usage of electricity in these entities, which cannot be covered by the outlays – thus resulting in a default float of at-least three to six months of billing. More study leads us to the fact that most of the uncovered usage is probably un-authorized and which can be stopped too. Let’s just consider the total air conditioning load totaling a stupendous 12000 MW plus in high summer and which figure is also added upon by the governmental entities in a big way. The GoP only allows BPS-20 and above officers to use ACs (centrally air-conditioned premises and buildings are an exception), while the ubiquitous AC has entered nearly all offices unofficially. A host of other gadgets too have joined normal office and official residences (including messes and hostels) and which result in high electricity bills. In other words, either strict check ousts the high demand or the yearly outlays for electricity bills get at the least doubled. In case the issues not taken up in earnest then nothing is bound to change.

Another norm that has pervaded the various departments is the practice of allowing re-appropriation of heads of accounts at will, leaving not much to pay for the electricity usage. In other words, the issue boils down to high usage of electricity, non-payment or delayed payments and the continuous pressure on the Power Sector.

What needs to be done? How do we come out of the present morass? Can the present way of doing things change? As a solution, we see that the Power Division through its PP&MC (Power Planning & Monitoring Company) – headless since long, would have to formulate a strategy to contact all of the governmental entities that make belated payments or are in nearly perpetual default. Once formulated, the required out-reach would be put in place on the immediate basis, where the default details would be shared with the apex of the particular governmental entity – and the specific plan for timely – rather, advance payments to be made for the historical usage during the first week of each month – to be corrected (negative or positive adjustment) before the next bills are issued. It would be akin to what the SNGPL and the SSGC do, where advance billing and adjustments thereof are normal and in practice since long. This interaction at the apex level would also provide a chance of doing away with any complaints of overbilling etc.

Once the process is firmed-up in the above manner, then the DISCOs (through their CSDs) would take over and assure implementation of the above SOPs. This co-ordination between the Power Division/PP&MC and the governmental entities would assure timely payment of the bills and then arrange for proper billing too. Implementation of this SOP would also assure that the electricity usage remains within limits and that there is no misuse. Because of the present dis-connect, both the DISCOs / Power Sector and the governmental end-users are at a loss. As this thrust is to be spear-headed by the Power Division, hence full recovery of the governmental bills will become its obligation. Of course, it would have the DISCO staff at its call. This would assure the availability of plus Rs. 300 billion with the Power Sector in a max of six (6) months besides inculcation of DSM (Demand Side Management) and EE (Energy efficiency) models in the government. This would also spark the present lack luster over-all recovery systems of the DISCOs. Besides, timely bills payment culture at all levels has to be inculcated. More so, when all consumers are considered the same for the electricity sale without special facilitation for the governmental ones to delay payment of bills.

Another tangential issue is the penchant of the Pakistanis to conjure or craft projects at will. Here, induction of Solar Power Systems by the governmental entities to reduce expenditure on energy usage refers. As a consequence, such entities have become the dumping ground for spurious equipment. And when Pakistan is already a dumping ground for such equipment (along-with most of the domestic appliances), very soon the users would be forced to seek DISCO power. The right way here is to first start with the DSM (Demand Side Management) and EE (Energy Efficiency) in the works and then arrange for the solar systems through stringent and strict inspection, etc. This can be done through the technical departments with the federal and provincial governments on behalf of the concerned departments.

Engr. Tahir Basharat Cheema, "Govt as the biggest power defaulter," Business recorder. 2023-09-17.
Keywords: Economics , Power sector , Electric supply , Cantonment board , Electricity bills , Municipal corporations , Karachi , Pakistan , AC , KE , DISCO , SSGC , SNGPL , EE , PHED , IMF

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