Overcoming $600m deficit : US asks Pakistan to privatise power companies

At present, hydropower has a lower percentage in total electricity production because of lack of investment and most power is produced in plants fueled by coal, gas and furnace oil. PHOTO: FILE

In an exclusive chat with The Express Tribune, US Agency for International Development (USAID) Programme Office Director for Pakistan John Morgan said USAID had a longstanding relationship with Pakistan in the energy sector.

He underlined the need for fully privatising power companies which would improve efficiency and enhance recoveries. At present, the companies are facing a revenue shortfall due to power theft, slack recovery of bills and technical losses.

Power companies got revenues of $5.5 billion in 2011 with a deficit of $600 million due to system inefficiency.

As different consumers were paying different tariffs for electricity supply, Morgan suggested that every consumer should pay an equal price and subsidy should only be given to lifeline consumers, which consumed 50 units of electricity a month.

He said USAID was working with Pakistan to increase energy supply which would add 1,000 megawatts to the national grid by 2013. Under the programme, USAID will help to build new power plants, rehabilitate existing plants and restore lost capacity of Wapda’s generation companies (Gencos) which were 20 to 30 years old.

Morgan said USAID would provide $280 million to rehabilitate power plants this year and the amount comprised 25 to 30 per cent of the agency’s annual budget for Pakistan.

In the first phase, USAID will focus on three areas which include increasing power supplying capacity, completing Gomal Zam and Satapara Dams and rehabilitating power plants. It will also support the country in replacing some parts of generators at the Tarbela Dam which will improve power supply by 128 megawatts.

In the second phase, the agency will help power distribution companies in bringing down line losses to improve electricity supply as well as revenues.

According to Morgan, USAID has started providing energy-saving devices for the agricultural sector. At present, there are 230,000 tube wells which are running at 30 to 35 per cent efficiency rate. These tube wells will be replaced with efficient machines.

Under a cost-sharing programme with the farmers, USAID has already replaced 1,400 tube wells, leading to saving of 10 megawatts.

In a bid to make the power distribution system more secure and effective, Morgan said the US had provided assistance for technical training of linesmen which would ensure their safety and improve performance of the companies.

He called for reforming the energy policies in such a way that the power system could operate according to US and European standards.

At present, hydropower has a lower percentage in total electricity production because of lack of investment. Morgan was of the view that Pakistan had abundance of water and coal and this potential needed to be further developed. “There should be a balance in use of furnace oil and gas by power companies,” he said.

Published in The Express Tribune, February 15^th, 2012.