Loss of Rs30 billion averted, claims power ministry

Calls 2015 a turnaround year when recoveries got better, losses eased

ISLAMABAD: The Ministry of Water and Power has prevented a possible loss of Rs30 billion in the power sector in payments to independent power producers (IPPs), fuel invoices, furnace oil inventories and overpayment of price, a ministry official said.

“Around Rs30 billion was saved through preventing irregularities in the process of payments to the IPPs, payment of a higher power price, manipulation of fuel invoices and maintenance of furnace oil inventories,” the official told Prime Minister Nawaz Sharif during a high-level meeting held in the latter half of February.



He called 2015 a year of turnaround for the power sector as recoveries improved considerably and transmission and distribution losses fell.

In the year, Rs51 billion was recovered from power consumers, which constituted 93.50% of the total amount billed compared to 88.6% in the previous year. “This was the highest rate of recovery in the last 10 years,” he remarked.

On the other hand, transmission and distribution losses were brought down by Rs10 billion whereas aggregate technical and commercial losses dropped from 28.2% to 23.4% by the end of 2015.

“Moreover, power generation cost came down by Rs57 billion on the back of efficient monitoring,” the official said, adding the ministry of water and power, in another major milestone, had been able to facilitate the new IPPs in increasing their production.

The ministry managed to cap circular debt at Rs329 billion and kept ample stock of fuel for its supply to scores of power plants for electricity generation.



The ministry had also been able to produce 16,866 megawatts of electricity at the peak generation time of July 2015 compared to the installed capacity of 21,425MW. Payments to fuel supplier Pakistan State Oil, the IPPs and gas companies also picked up significantly.

In the meeting, the ministry proposed the imposition of restrictions on announcing a new power tariff for imported fuel-based power generation and fresh sovereign guarantees for payment of capacity charges to the IPPs.

Sovereign guarantees to the power producers amounted to Rs272.2 billion in December 2015, accounting for 20-30% of the power generation cost being borne by the consumers.

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According to the ministry official, the guarantees will rise to Rs310.8 billion in 2016, Rs534.8 billion in 2017 and Rs630.8 billion in 2018. This means that the amount committed in sovereign guarantees will comprise 40-45% of the power generation cost by the end of 2018 - the year when elections for a new government will become due.

Published in The Express Tribune, March 23^rd, 2016.

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