For every 2 watts of electricity needed in the country, the national grid fails to supply almost 1 watt, a shortfall that has thousands of people screaming and protesting in the sweltering streets of urban Pakistan. Prime Minister Yousaf Raza Gilani’s response to the ballooning crisis so far is to call a meeting.
The prime minister is due to meet with Finance Minister Abdul Hafeez Shaikh, Petroleum Minister Asim Hussain and Water and Power Minister Naveed Qamar to discuss the financial crisis in the power sector that is largely to blame for the 8,900 megawatt power shortage in the country. The chief ministers of all provinces are also expected to attend.
The meeting is a response to the latest escalation in the crisis that has seen Pakistan State Oil, the largest oil marketing company in the country, suspend its supplies to the power generation companies that has not paid about Rs155 billion in outstanding bills.
The company says it will not resume supplies till the power companies provide bank guarantees that they will pay the oil company. Banks, the power companies say, are unwilling to provide the guarantees owing to the already gigantic accumulation of circular debt in the power sector.
The power companies, in turn, are waiting for Rs210 billion from the state-owned Pakistan Electric Power Company (Pepco), the firm created by the government to manage the finances in the power sector, including the disbursement of subsidies promised by Islamabad.
“The government has no option but to pay the dues it owes the power sector to continue operations,” said Abdullah Yousaf, the chairman of the Independent Power Producers Advisory Council (IPPAC), an industry group.
Pepco officials estimate that about 39% of the current shortfall is due to PSO’s suspension of supplies. They claim that they have provided the oil company about Rs8 billion on Saturday to resume oil supplies to the Hub Power Company and the Kot Addu Power Company, the two largest electricity generation firms in the country. Total power production in the country rose to approximately 10,000 megawatts on Sunday, compared to 9,000 megawatts on Saturday, said Pepco officials. This compares abysmally, however, to the estimated demand of 19,000 megawatts.
Adding to the problem is the closure of the Chashma nuclear power plant, which was shut down owing to a technical fault.
“PSO wants to avoid accumulating receivables, which have now crossed Rs155 billion for the company,” said one source.
Published in The Express Tribune, October 3rd, 2011.