Energy: Power crisis bites 2% off GDP annually

Published: June 1, 2012

Government plans to phase out subsidy in the power sector and cut down subsidies in a bid to bring it back on its feet.

ISLAMABAD: The estimated cost of the power crisis to the economy is approximately Rs380 billion per year, around 2% of GDP, according to the Economic Survey 2011-12 released on Thursday.

Meanwhile, the cost of subsidies given to the power sector during the last four years 2008-2012 is Rs1,100 billion, almost 2.5% of GDP.

The government plans to phase out subsidy in the power sector and cut down subsidies in a bid to bring it back on its feet, adds the survey. Subsidy claims amounting to Rs56 billion were disbursed till December 2011 while overall subsidy claims are estimated to between Rs91 billion and Rs125 billion. Subsidies have cost the government Rs1 trillion in past four years.

Meanwhile, power distribution companies (DISCOs) were to receive Rs354 billion till February 2012 against payables of Rs398 billion till April 2012.

“Heavy line losses at 20%, incomplete corporatisation, weak governance and costly fuel mix put an extra financial burden,” adds the survey.

The liquidity crunch in the power sector has made it difficult for power generation companies to purchase oil, which has resulted in under utilisation of installed capacity by 4,000MW. Despite power shortfall of 6,000MW per day, the number of power consumers increased by 730,000 to 20.85 million during July 2011 to March 2012 compared with 20.12 million in the corresponding period last year.

The contribution of hydel electricity generation increased to 33.6% in 2010-11.

Water and Power Development Authority (WAPDA) remained the main contributor to electricity generation with 48.7% followed by Karachi Electricity Supply Corporation, Pakistan Atomic Energy Commission and then the two independent power producers Kot Addu Power Company and Hub Power Company. IPP contributed almost 25% of the total power generation.

Published in The Express Tribune, June 1st, 2012.

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