PAC grills energy officials about inefficiencies

Warns making system losses part of circular debt, rather than overburden consumers

ISLAMABAD: The Public Accounts Committee (PAC) warned the government to improve dilapidated electricity supply systems and governance structure of distribution companies that caused over Rs215-billion losses in just the last one year.

In case the government is unable to improve the electricity transmission and distribution systems, the PAC may stop recovery of losses from consumers and make the amount part of the circular debt, warned PAC Chairman Syed Khursheed Shah.



The PAC also advised the government to shun the policy of setting up coal-fired power plants in urban areas, fearing that this may cause serious health issues. Central Punjab’s population is at risk of polluted air-related diseases due to the 1,320MW Sahiwal Power Plant, said the PAC chairman.

The parliament’s accountability arm was briefed on overall losses and theft in the electricity sector from the Power Division. Shah observed that the PAC consumed most of its time in discussing audit objections that appeared minuscule compared with billions of rupees in losses caused by systemic inefficiencies in the power sector.

Secretary Power Yousaf Naseem Khokhar said that during the last fiscal year 2016-17, transmission and distribution losses stood at 17.9% - which was equal to the level of the previous year. However, the losses were significantly higher than the limit approved by National Electric Power Regulatory Authority (Nepra), he said. The higher than permissible limit losses eventually become part of the circular debt.

The secretary said that 1% losses were equal to Rs12 billion and 17.9% translated to over Rs215 billion. Out of the total losses, less than 2% were on account of transmission and the remaining 16% were on account of distribution, the stage where consumers can indulge in theft.

He further said that the government is trying to reduce system losses and has managed to bring them down to 17.9% as of June this year. The recoveries also remained stagnant at last year’s level of 94% of the billed amount, according to the Power Division.



“Four years ago, we had been told that after Rs480 billion payments, the issue of circular debt has been resolved forever,” said Shah. “[But] the circular debt is bound to rise due to poor transmission and distribution systems,” added the Chairman PAC.

The Power Division officials stated that Lahore, Gujranwala, Faisalabad and Islamabad power distribution companies were performing well. The problem was with Multan, Peshawar, Hyderabad, Sukkur and Quetta’s distribution companies.

The line losses of Lahore Electric Supply Corporation (LESCO) were not high because of small transmission lines that allow fewer technical losses, Shah said. People indulged into electricity theft due to overbilling, as one does not find this phenomenon in case of gas bills, Khursheed Shah said.

There are lots of governance issues that have yet to be resolved, said the secretary power. He said that even the concerned Discos’ officers do not attend complaints that a consumer wants to register by calling on the published telephone numbers. In fact, no one bothers to pick the phone, said the secretary.

Khokhar said that the government is trying to improve the situation, admitting that the late delivery of bills and overbilling does take place.

To a question about the surplus electricity, the secretary power refrained from giving a firm statement.



“I cannot give a statement about the surplus electricity, as it was a complicated equation,” he stated. The secretary said that the first draft report of the third party validation of demand and supply was expected to be ready soon and will be shared with the Cabinet Committee on Energy.

The secretary said that in July 2016 the Ministry of Power opined that there will be surplus electricity and there was no need to install new power plants. But there was also a view that the current demand was artificially suppressed, he added.

The secretary said that the government was considering setting up new power distribution companies in Punjab and K-P. The prime minister has already issued directives to separate Hazara Division from the Peshawar Electric Supply Company and setup a new distribution unit, he added. LESCO and Multan Electric Power Company may be divided into two, he added.

Published in The Express Tribune, November 2^nd, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.