Pakistan's power sector’s losses highest in region

K-Electric presentation highlights overall energy planning remains fragmented

ISLAMABAD: The Aggregate Technical & Commercial (AT&C) losses of Pakistan’s power sectors soared to 29.7%, the highest in the region while other countries fared much better, according to the K-Electric Investor Presentation 2020, a copy of which is available with The Express Tribune.

This regional comparison revealed Sri Lanka had the lowest AT&C losses of 10%, followed by Turkey 14.8%, Bangladesh 21.9%, India 23.9% and Nepal at 24.4%. This revelation comes in stark contrast to the Pakistan Tehreek-e-Insaf (PTI)-led government’s tall claims about significant reforms in the power sector to reduce losses in the transmission and distribution system.

The power sector comparison had been made by the K-Electric to encourage investors to invest in the utility. The report also highlighted that while over 10,000 MW of power generation has been added in the last five years in Pakistan, overall energy planning remained fragmented across the energy value chain, with little focus on reducing losses and upgrading transmission and distribution capacity.

As per the report, 26% of Pakistan’s population does not have access to grid electricity - signalling lack of investment in transmission and distribution segment despite capacity additions in generation. On the other hand, 100% population of Turkey and Sri Lanka has access to grid electricity whereas India, Nepal and Bangladesh have 82%, 77% and 75% electrification rate, respectively.

The report suggested that circular debt, significant increase in capacity payments, tariff subsidies and high losses and weak governance of ex-Water and Power Development Authority (Wapda) entities are key challenges facing Pakistan’s power sector. It also says that between FY12-18, 5.2% growth in peak demand in Karachi has been observed while in the rest of the country it remained 2.4%.

The report proposed improvement in the governance and efficiency of Ex-Wapda distribution Companies distribution companies, to make them financially self-sufficient, thus reduce the burden on national exchequer and enable the sector to be financially sustainable.

The report also compared K-Electric’s new tariff versus previous multi-year tariff highlighting that the current MYT presents a different, de-risked, return on Regulatory Asset Base (RAB) structure with additional upsides for K-Electric to unlock value. 

Published in The Express Tribune, May 10^th, 2020.

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