Govt drops plan to control power theft

Delay in decision on fate of foreign-funded scheme for Lahore cost country $2.2m

Shahbaz Rana October 26, 2021


After holding on for six years, Pakistan on Monday gave its approval for shelving a foreign-funded project to install smart electricity meters in the country’s second largest city, giving a jolt to the plan of reducing losses and electricity theft.

The Central Development Working Party (CDWP) has approved changes to shift the scope of $455 million Asian Development Bank (ADB)-funded Advanced Metering Infrastructure (AMI) project, a senior official of the Ministry of Planning told The Express Tribune.

The ADB had approved a $400 million loan for the project in November 2015.

The federal government’s indecisiveness about the fate of the scheme over the past six years, which included three years of current Pakistan Tehreek-e-Insaf (PTI) government, cost the country $2.2 million till March 2021 on account of commitment charges on the $400 million loan.

The country had secured the loan for installing 1.7 million smart meters within the jurisdiction of Lahore Electricity Supply Company (Lesco) and 900,000 meters in the area covered by Islamabad Electricity Supply Company (Iesco).

The CDWP approved the shelving of the project aimed at installation of smart meters in Lesco areas on the recommendation of Ministry of Energy, said the official.

He added that the project of installing smart meters within the Iesco jurisdiction would be converted into a pilot scheme.

The Manila-based lender approved the $400 million loan but work on the project never began due to the reluctance of Power Division. From the beginning, Pakistan was not ready to receive the loan due to differences over the use of imported technology and the plan to privatise all power distribution companies under the then $6.2 billion International Monetary Fund (IMF) programme.

The ADB then pegged a budget support loan with the smart metering project, leaving no option for the then finance minister Ishaq Dar to agree to the bank’s terms.

The government’s decision to shelve the Lesco component will give a jolt to the plan of improving efficiency and reducing line losses within the jurisdiction of the distribution company, which is often accused of fleecing consumers by overcharging them.

One of the biggest failures of the PTI government was the increase in circular debt to over Rs2.3 trillion within three years and one of the key reasons behind the uncontrollable power sector debt was high line losses and low recoveries of electricity bills.

The AMI project is also included in the list of problematic foreign-funded projects and has been discussed in the National Coordination Committee on Foreign Funded Projects (NCC-FFP).

The ADB had fielded a special loan review mission for the project to further review the reasons causing delay in its implementation. The mission held a meeting with the minister for power.

During the meeting, the government explored the possibility of changing the scope of the project from one circle each in two distribution companies to all distribution companies and not installing meters for each consumer but only on pole-mounted transformers (PMTs).

The ADB mission indicated that at this stage such a change would not be acceptable to their board and given the little time available, the financing for the project would have to be dropped, the CDWP was informed.

Published in The Express Tribune, October 26th, 2021.

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