Dark days ahead: ‘Electricity woes to worsen in future’

Nepra chairman says circular debt would cripple the energy sector.

ISLAMABAD:

Over Rs300 billion in circular debt would cripple the energy sector further and lead to a power shortfall of over 5,200 megawatts (MW) next year, National Electric Power Regulatory Authority (Nepra) Chairman Khalid Saeed said on Tuesday.

“Record high furnace oil prices have plagued the private and public power producing companies, leading to an abnormal rise in power tariff for the consumers,” Saeed informed a parliamentary panel.

The authority has sent nine advisories to the government for improving efficiency of public sector companies, he said.

“Generation companies, distribution companies and Pakistan Electric Power Company (Pepco) have not been able to keep up due to a lack of funds,” he informed the Senate standing committee on cabinet secretariat and provincial coordination.

Our installed capacity is 21,000MW but we are producing only 11,000MW due to lack of resources, he informed the panel.

“If distribution companies do not pay their dues within two months, the situation will get worse,” he said.

Pakistan is among countries that produce a large chunk of their electricity through furnace oil, he said, adding that electricity produced through furnace oil costs at least Rs22 per unit. He said that Nepra has rendered several advisories to the water and power ministry, the finance ministry and Pepco for switching to other available alternatives including coal, liquified natural gas and water.

Losses, wastage

Private power generation companies in the country are facing a host of problems, the chairman said.

He indicated that the authority may cancel licences of some private power producers that have to pay billions of rupees but he did not disclose any names during the briefing.

Nepra officials also informed the panel that power distribution companies faced losses between 10 and 34 per cent during the last fiscal year.

Losses of distribution companies were as follows: Hyderabad 34%, Quetta and Karachi 20%, Lahore 12%, Gujranwala 11 and Islamabad 10 per cent.

“Thirty per cent of electricity produced is being wasted due to technical and administrative faults including electricity theft,” a senior Pepco official informed the committee.

Giving a break up of wastages, he said that electricity not utilised amounted to over 34 per cent in Hyderabad, 33 per cent in Peshawar, 22 per cent in Karachi and 10 to 15 per cent in Faisalabad, Islamabad and Gujranwala in 2010-11.

Nepra’s finances

Khalid informed the committee that Nepra has Rs978 million in bank balance to meet its expenditure while billions of rupees of power sector companies are pending with different public and private entities who have challenged their legality in various courts.

The panel’s chairperson Shahid Bugti directed Nepra to establish complaint cells at provincial level to address the complaints of consumers.

Meanwhile, Senator Safdar Abbasi said there was a lack
of political will to overcome the problem of load shedding in Pakistan.

Published in The Express Tribune, July 13^th, 2011.