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Power sector blues!

The electricity users of Pakistan are up in arms. They have received highly inflated bills which, according to them, is not fair. This time around, the AJK consumers too have joined in the protests by burning a colossal plus ten thousand monthly bills in Rawalakot alone. That till now, they had been receiving highly subsidized bills – nearly one-third of the tariff in Pakistan, has been conveniently forgotten. All in all, the situation is most grim and bound to rise even more in light of the latest QTA (Quarterly Tariff Adjustments) for last fiscal’s fourth quarter of Rs. 5.40 per unit (notwithstanding the resolve to stagger recovery thereof over six months instead of the requisite three billing cycles). The exponential ballooning of the bills is also on account of charging of raw capacity charges due to reduced demand and the outgoing revenue based load shedding and the similar rise in the GST on the usage, which has increased in direct proportion to the rise in the recently increased electricity tariff. It translates into the fact that with each cent rise, the GoP collects an equal amount in GST. This is most unjust – specially, in today’s serious economic crunch.

The question that begs an answer is as to why the fiasco has taken place and what could be the solution. Surely, it all is on account of ignorance of the Power Sector dynamics by the relevant entities tasked to govern, regulate, manage and operate the generation, transmission and distribution systems in the Country. The strange part is that the whole of the system has collapsed and that too simultaneously. None of the related entities has even squeaked during the build-up of the crises. Indeed, this was the time of transition from the elected to the caretaker government. The detractors would call to attention the conduct of the permanents posted in the lacking entities and the apathy on their part. Furthermore, the issue of the additional drivers that have exacerbated the crisis have been highlighted by academicians and Power Sector professionals alike, with calls for inculcating complete professionalism in the works. In other words, all connected from the governors to the operators of the power system have to be hardcore professionals.

What are these drivers that have further coagulated the miseries of the people. These are summed-up as the plethora of feckless policies – firmed-up through mindless decision making and that too for the few, the continued side-lining of any good part of the policies by self-interest, these being at cross-purposes with the general good of the people, relegation of these on intervention of the self-serving elite, lack of understanding of the dynamics of the Sector – specially, the fact that add-ons and taxes on the bills automatically inflate with any increase in the base tariff etc., that socially Pakistanis are presently in the process of joining the lower middle class in droves and that increase in electricity usage is a manifestation of this process and that it cannot be scuttled, that commerce and industry is in the process of import substitution thus making gadgetry available for the people – once only for the well-to-do, that the consumption-led economy has never been scrapped in favouring of any production-led growth, that the banking sector operates with impunity while earning colossal amounts on consumer credit etc. Unfortunately, none of these externalities has been taken into consideration by the concerned while planning for the Power Sector.

It is further seen that there is a serious disconnect between the above entities and thus the generators are oblivious of their obligations, the TRANSCO has a below par infra-structure, is beset with procurement and contracting scandals and also remains unable to serve the pipeline ARE (Alternate & Renewable Energy) projects. The DISCOs are strangled by totally compromised and non-professional BoDs. Sadly, these are more of a drag than any help. The Regulator with semi-professional staffing is afraid to reject padded-up petitions that require acceptance of un-substantiated claims just to keep the system going on.

The current situation can be ameliorated as a first to some extent by firstly wowing to induct total professionalism in the Sector and that too in the least time period. Today’s wows, thereafter, have to be followed by priority up-gradation of the nearly dormant PP&MC (Ex-PEPCO) with the required hard-core professionals and the best of the MD instead of a civil servant lately notified for the job. The present fully politicized BoDs of all the related entities have to be changed in line with the fit & proper criteria of the SECP (Securities and Exchange Commission of Pakistan)and all of the CEOs – specially of the DISCOs, have to be re-appraised, and in case of need, replaced with proper re-source on at least a three-year’s tenure. All three of the above pre-requisitions can be done in a max of 30 days. Concurrently, so as to provide some relief to the consumers, the leviable GST on electricity bills has to be put on hold– thus lessening the burden on the common electricity consumer. This step would lessen the present burden for the while. The final step suggested is to introduce DSM/conservation in the country in a big way – thus reducing the demand by 25%. This would include a moratorium on IPP (Independent Power Producers) raw capacity payments for the present fiscal year during which solutions to reduce the high generation cost would be broached and introduced. This is of utmost priority as the economy and specially the people are simply unable to pay for today’s bloated electricity tariffs. The present financial year thus has to be the watershed period for correction of the wrongs of the last two decades. May be, it is some atonement for the erroneous and half-baked reforms undertaken by us during the above period.

Engr Tahir Basharat Cheema, "Power sector blues!," Business recorder. 2023-08-27.
Keywords: Economics , Environmental sciences , Electricity users , Electricity tariffs , Power producers , Electricity consumer , Pakistan , Rawalakot , GST , MD , DISCOS , CEOs , QTA , ARE

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