Power firms to recover Rs140b to offset support package cost

Are required to generate the amount through reduction in line losses, better recoveries

ISLAMABAD: The government has set a target of Rs140 billion for power distribution companies which will recover it through reduction in line losses and increase in collection of electricity bills in order to offset the impact of an industrial support package.

Officials told The Express Tribune that the Power Division would push down current line losses and improve the recovery of electricity bills for which a target of Rs60 billion had been set for the current financial year 2018-19.



In addition to that, a target of Rs80 billion was set for the last financial year 2017-18 to offset the impact of the industrial support package.

The government has decided that industrial consumers will continue to receive a support package of Rs3 per unit. The package will be funded through efficiency gains in the power sector with improvement in bill recoveries and reduction in distribution losses and theft.

The tariff change for industrial consumers will remain within the revenue requirements. The government also decided that average tariff increase over the last notified tariff would be Rs0.78 per unit. Five zero-rated industries would be given a rate of 7.5 US cents per unit.

The prime minister’s initiative to control power theft has been launched in Punjab through a joint task force of the Power Division and the provincial government. A similar exercise will be launched in all other provinces.

The non-recovery of electricity bills was estimated at 10% amounting to Rs114 billion in 2017-18. In order to improve the recovery, a target of 2% per year, amounting to Rs23 billion, had been set through the use of technology and administrative measures.

In a recent meeting of the Economic Coordination Committee (ECC), it was informed that efforts were being made to bring down line losses in the power sector.

The meeting noted that a substantial amount could be generated through reduction in losses and bringing improvement in recovery. The committee emphasised that there should be zero tolerance against defaulters of electricity bills.

Actual line losses in the power sector stood at 18.3%, however, the regulator - National Electric Power Regulatory Authority (Nepra) - allowed recovery of 16.3%, which resulted in addition of Rs202 billion to the circular debt.

The low recovery of power bills from consumers was also a major reason, which stood at 90%. It added Rs205 billion to the circular debt.

An amount of Rs102 billion had been added to the circular debt due to non-payment of subsidy to consumers of tribal areas, Azad Jammu and Kashmir (AJK) and industrial support. An amount of Rs86 billion was due against K-Electric.



Officials said there had been a tug of war between the Power Division and the regulator in the past as the previous government had been pressing the regulator to increase the benchmark of line losses. This would pave the way for the recovery of losses from the consumers rather than tightening the noose around the power distribution companies for bringing efficiency by controlling theft.

However, the new government has given a target to the power distribution companies to reduce losses and improve the recovery of electricity bills.

Published in The Express Tribune, October 27^th, 2018.

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