A dark reality

Govt has cut down its subsidy for power sector and managed it by absorbing the benefit of falling oil prices

The government has admitted that power companies have been plagued with losses caused by a multitude of reasons, which has led to a reduction in electricity generation and, in effect, resulted in prolonged outages. The Ministry of Water and Power, at a meeting of the Economic Coordination Committee (ECC), admitted that companies were finding it hard to clear dues of the Central Power Purchasing Agency. This admission comes amid the PML-N’s repeatedly-stressed promise that it would end power cuts by the end of its five-year tenure, an assurance on which it is building its campaign for the upcoming elections. In three years of its term so far, the energy crisis has persisted with landmark deals doing little to reduce power outages. While the country may have moved on the road to recovery, early signs suggest the journey would be a long, arduous one with literally all stakeholders needing to play their part.

Has it happened though? The government has cut down its subsidy for the power sector — in part, because it wanted to restrict its budget deficit — and managed it by absorbing the benefit of falling oil prices. Consumers were left to pay the same amount and it was hardly noticeable. But when the government’s arm says that power companies continue to face losses, one is inclined to believe that groundwork is being laid for higher tariffs and a retraction on the election promise that electricity cuts would end. It would hardly be surprising to see that power outages persist as the government remains more interested in improving numbers and less interested in real progress. When power companies are discussed, electricity theft and distribution losses take the lead in the issues facing them. Outstanding payments, which are also caused by a number of defaulters including government departments, make matters worse. Still, there has been little talk on how to improve efficiency. The IMF programme that called for privatisation of power firms has been shelved and one is struck with reality; these companies will continue to work the way they have. In such a scenario, ending power cuts is an empty promise built on, quite literally, a dark reality.

 

Published in The Express Tribune, July 17^th, 2016.

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