Energy sector — getting house in order

With the new government in office well into its third month, the energy sector remains awaiting meaningful measures for its woes to be addressed. Although it’s too short a time to imagine things turning around, at least future directions are expected to be made clear pretty soon.

The over a decade-long energy crisis is still very much alive. Despite the last government’s acclaimed installed capacity of 28,000MW, electricity load-shedding has not vanished. Gas load-shedding is also there with warning shots being called for it to get intense in winter. A substantial proportion of energy supplies are lost in transmission & distribution. Above all, the ever escalating circular debt has been reported to have reached Rs1,300 billion. The energy crisis is actually far deeper than these apparent dimensions. Besides these issues, acute dependence on imports, detrimental energy mix and dearth of management capacity are areas of further concern. As a matter of fact the latter set of problems, which is hardly under the radar, underpin the state of affairs. The initiatives taken to address the crisis over the last decade or so have been segmented, shortsighted and often counter-productive, consequently the problem still stands tall. Any sustainable and meaningful solution to the crisis requires a visionary, comprehensive and cohesive approach strategically targeting all problem areas.

Pakistan’s energy crisis can be attributed to bad governance more than anything else. It is simply a result of decades of compromised policy and decision making, and vested interests. As Einstein famously said

‘We can’t solve problems by using the same kind of thinking we used when we created them’, good governance would be imperative for addressing the energy crisis. Colossal losses in the energy sector are a wee example of the bad governance in the energy sector. The present government has announced a crackdown on electricity theft, which is a commendable step. The transmission and distribution system has been one of the weakest links in the whole energy equation, thanks to years of negligence. The system is insufficient, weak and has tremendous leaks. The system is reported to be incapable of distributing more than 19,500MW of electricity as against the installed capacity of 28,000MW. The fragility of the system is evident from a number of national level transmission failures — including the one in 2015 that plunged over 80% of the country into darkness for hours — as well as instances of over 200 feeder trips in a single day in Lahore. The losses in the transmission and distribution system — predominantly thefts and non-payment of bills — are reported by Nepra to be 18% though actual figures are understood to be considerably greater as the trend of overbilling to adjust higher losses is quite common. The recent case of late Habib Jalib’s daughter is a wee example here. Losses are also rife in the gas sector, generally termed as unaccounted for gas (UFG,). Over the last decade UFG has almost doubled, reaching to a level of over 15%, thanks to rampant theft. UFG, typically in a range of 2-3% in the developed countries, should be below 5% for a country like Pakistan.

The control of losses requires improvement both on the technical and governance end. Technical solutions need to be deployed to curtail thefts. The Minister for Energy has discussed plans for using special cables that would resist illegal connections. Prepaid electricity metering is another effective solution that has been successfully tried across the world, both in the developed and developing countries, to control losses and increase revenues. Besides the technical measures, widespread corruption in the utilities needs to be sorted out. Mostly, thefts are patronised by the utilities staff or are given a blind eye in case of influential perpetrators. The theft facilitators in utilities, that include low ranked staff such as meter readers and linesmen as well as top officials, need to be tamed to find a permanent solution.

Let’s not forget crack down on electricity theft is not a new idea; such moves have been announced in the past well but only to quickly erode away without any tangible results. It’s all summed up by a last year’s news report that the State Minister for Water and Power came to attend an executive meeting of Multan Electric Power Company (MEPCO) in the company of a person who was prime suspect in a Rs600 million power theft case being probed by the National Accountability Bureau (NAB). The present crackdown on theft should not be momentary as has been the case in history, it should aim to address the issue for good with clear key performance indicators. There should also be proportionate focus on all nine DISCOS as per their losses bearing in mind that three of them have the figures over 30%. It is also pragmatic to revisit the Center-Provincial stakeholder-ship on issue of losses.

Over the years the energy sector has seen tons of initiatives. Everything that exists in the concerned dictionary — ie policy reforms, road maps, organisational restructurings, working groups, task committees and bailout packages — have been tried only not to deliver. Nothing has worked simply because there was no will. Let’s hope the new government is sincere in its promises. Intention alone however cannot deliver unless it is backed by sound strategy and commitment. Improvement in governance is thus imperative for the success and sustainability of any remedial measures in the energy sector. Things will not improve without getting the house in order.

Published in The Express Tribune, November 1^st, 2018.

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