Increasing power woes

Despite claims of higher recovery of bills and other improvements, the amount owed by consumers and distribution companies to the power sector keeps on increasing. According to a recent report by Pepco, the amount of receivables has crossed the Rs684 billion mark, indicating a massive structural issue within the sector that prevents it from standing on its own feet. In addition, the sector itself owes Rs300 billion to independent power producers, fuel suppliers and Wapda, making the situation far graver than what the government would have us believe.

Pepco revealed these figures in its comprehensive Financial Review 2015-16 to the Prime Minister Office and the Ministry of Water and Power, suggesting that the government, within its ranks, recognises and acknowledges the issue. While some progress has been made in the past – power sector dues of around Rs480 billion were cleared in 2013 – the issue is not even close to being addressed. At the same time, honest power consumers continue to suffer as they are unable to fully reap the benefits of the low cost of power generation since they are picking up the slack for other chronic defaulters. The government had committed to reforming and privatising power sector companies, but who would want to invest in a sector where payables and receivables run in the billions. The issue has for long been left unaddressed and with the IMF programme ending, reforms are expected to slow down further. The cost of power generation, according to the report, has come down by over 26 per cent, but the amount owed to the power sector keeps on rising. Sadly, it seems that Pakistan will continue to face a power crisis even with the addition of megawatts to the national grid due to inherent issues within the sector that have not been addressed.

Published in The Express Tribune, August 24^th, 2016.

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