ISLAMABAD: The Asian Development Bank (ADB) has underlined the need for full recovery of electricity bills from consumers in order to address financial woes of the energy sector.
A delegation of the bank made the emphasis in a meeting on Thursday at the Ministry of Water and Power, which reviewed the progress on ongoing ADB-funded power projects and the overall performance of National Transmission and Despatch Company (NTDC) and distribution companies in the energy system.
The ADB team pointed out that 81% of power distribution contracts had been awarded to different companies in Pakistan and with this the bank’s portfolio in the area of electricity distribution stood at $567 million.
Of this amount, 59% has already been disbursed, which is a much higher ratio.
In the area of power transmission, the ADB is providing $344 million worth of financing for multiple projects. In this connection, 91% of contracts have been awarded and 54% of the amount disbursed.
The ADB delegation expressed its satisfaction over the pace of work and capacity enhancement.
Distribution and transmission line projects are very critical for meeting the target set by the government to end power shortages by mid-2018.
Bank executives appreciated the improvement in power sector and expressed satisfaction over the pace of progress on planned projects. They also were interested in enhancing cooperation beyond the existing level.
Water and Power Secretary Mohammad Younus Dagha briefed ADB officials about the measures being taken by the power ministry to increase the role of NTDC and distribution companies in the ongoing projects.
The ministry was much concerned about building the capacity of NTDC and distribution companies in the management, procurement and financial matters and had been working on that for the past six months, he said.
Dagha blamed “irrational tariff” for problems in the power sector, but boasted that consumer bill recovery had jumped to a record high at 93%. In developed countries like the United States, the recovery rate is around 98%.
The secretary told the ADB delegation that the performance of distribution companies had improved a lot over the past two years. “This is reflected in the additional cash flow of Rs116 billion due to better distribution and lower line losses,” he said.
Power ministry officials assured the ADB that they would undertake reforms in the NTDC to bring improvement and efficiency in the areas of planning, designing and implementation.
The ministry is also looking for professionals both at home and abroad to engage them in the task of implementing reforms at market-based fair compensation packages in a bid to achieve optimum results.
On the consumer side, the ministry is working to facilitate customers, trace and correct wrong billing or over-billing and introduce mobile-metering concept to ensure more transparent and fair distribution of electricity.
Discussing progress on the Jamshoro power generation project, the two sides agreed to complete the process of awarding contracts as soon as possible. Issues pertaining to acquisition of land and coal suppliers are expected to be finalised by April this year.
Published in The Express Tribune, March 17th, 2017.