Cabinet members split over free electricity supply
Distribution companies were procuring less electricity, which resulted in higher capacity payments, and they failed to justify the low intake at a hearing. photo: file
Though members of the cabinet have voiced concerns over supply of free electricity to the employees of Wapda and DISCOs, the ministries are divided over the proposal of discontinuing such services, which are blamed for the runaway circular debt.
In a recent meeting of the cabinet, it was revealed that 189,000 employees of the Water and Power Development Authority (Wapda) and power distribution companies (DISCOs) were consuming free electricity. Of these, 14,000 are of officers’ grade and they will also be impacted in the first phase of proposed monetisation. In the huddle, the Power Division shared comments of the Cabinet Division, Finance Division, Ministry of Water Resources, National Electric Power Regulatory Authority (Nepra) and Wapda.
Nepra suggested that a utility allowance should be given to Wapda and DISCOs’ officials instead of free electricity and monetisation.
The Ministry of Water Resources stated that the proposed arrangement would result in no savings while the Finance Division recommended the discontinuation of free electricity. It was pointed out that monetisation would not include 18% sales tax and other taxes.
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Members of the cabinet inquired whether or not any similar perquisites were being given to other departments as well. The power secretary replied that except for power-sector employees who were not billed due to the facility, all other government employees and officers were billed for electricity consumption. Cabinet members suggested that the facility should be withdrawn from non-officer cadres.
The Power Division sought approval for the proposal of halting free electricity and giving a monetisation allowance to power-sector employees.
The cabinet noted that since Pakistan was under an IMF programme that did not support any subsidies, prior consultation with the Finance Division was necessary before considering any compensation package or relief.
The prime minister emphasised the need for providing relief to the common man while considering factors like power theft and capacity payments to independent power producers (IPPs).
It was noted that the facility of free electricity was introduced in 1974 as part of service benefits for the employees. It has remained in place for the employees of corporatised companies, ie, DISCOs, generation companies (Gencos), National Transmission and Despatch Company (NTDC), Power Information Technology Company (PITC) and Wapda.
The electricity units were charged in monthly bills while unconsumed units were carried forward to the following months. The expenditure was booked in accounts of the respective DISCOs.
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Additionally, sales tax was paid by the respective company. The employees only paid PTV fee. In case of NTDC employees, DISCOs billed the amount to NTDC.
The Senate Standing Committee on Power and the Public Accounts Committee had also recommended that free electricity should be monetised and the amount should be paid as part of the employees’ monthly salary.
Cabinet members felt that the provision of free electricity to anyone was unfair, especially considering the financial challenges being faced by the country. It was noted with concern that even retired employees were receiving the facility. Two possibilities were discussed. First, the withdrawal of the benefit offered at the start of employment could lead to extended litigation, so replacing it with monetisation was considered appropriate. The second view was to withdraw the free units altogether without any compensation, considering them unfair and inequitable.
The law minister emphasised that the privilege of free electricity was provided as part of the employment contract. Therefore, making changes to the terms and conditions of service, including withdrawal without any compensation, was likely to result in litigation.
To address the issue, the Power Division proposed the following measures for cabinet’s consideration:
In the first phase, the free electricity facility for in-service officers (BS-17 and above) will be monetised excluding taxes and duties. Henceforth, all in-service employees in grade-17 and above will pay the electricity bills issued by the respective DISCOs.
Published in The Express Tribune, October 21st, 2023.
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