Government likely to recover full cost of power theft from consumers

Honest consumers may be forced to pay Rs202b to power companies

ISLAMABAD: The Pakistan Tehreek-e-Insaf (PTI) government is mulling over a plan to burden honest consumers, which are paying their bills regularly, with payment of Rs202 billion in order to pass on the full impact of power theft to overcome circular debt in the power sector.

Officials in the Ministry of Finance told The Express Tribune that a plan was presented in a high-level meeting chaired by Finance Minister Asad Umar.

Umar was informed that actual line losses in the power sector came in at 18.3%, but the National Electric Power Regulatory Authority (Nepra) allowed recovery of 16.3%, which resulted in addition of Rs202 billion to the circular debt.



Officials revealed that the finance minister directed the Ministry of Energy (Power Division) to hold meetings with Nepra officials to discuss the shifting of 2% differential to the consumers.

Following the meetings, a report will be submitted to the finance minister for taking action.

Various factors were highlighted which had been blamed for the increase in circular debt. These included lower recovery of electricity bills and constraints faced by distribution companies.

Bill recoveries stood at 90% adding Rs205 billion to the circular debt. Another Rs102 billion was added to the debt due to non-payment of subsidy to the former Federally Administered Tribal Areas (Fata), which are now part of Khyber-Pakhtunkhwa, Azad Jammu and Kashmir and industrial units. An amount of Rs86 billion was due against K-Electric.



Officials revealed that a tussle had been going on between the Power Division and Nepra in the past as the previous Pakistan Muslim League-Nawaz (PML-N) government pressed the regulator to increase the line loss benchmark in order to recover the loss from the consumers. It opposed the tightening of noose around heads of power distribution companies in an attempt to control theft.

Later, the power-sector regulator gave in to the pressure and increased the loss benchmark, placing more burden on the consumers.

It seems that the new Pakistan Tehreek-e-Insaf (PTI) government is also going to follow the same strategy of penalising consumers, rather than taking action against officials of the distribution companies for their involvement in corruption and aiding power theft.

During its 2013-18 tenure, the PML-N saddled the consumers with a surcharge of Rs2.3 per unit, which inflated their electricity bills. It also imposed several new surcharges including the financial cost surcharge, tariff rationalisation surcharge and debt servicing surcharge to pocket billions from the consumers.

The former government also borrowed Rs180 billion to finance the circular debt in last two months of its tenure and the amount was being recovered from the consumers in surcharges on their electricity bills.

Published in The Express Tribune, September 4^th, 2018.

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