‘Energy crisis can be ended in six months’

Furnace oil should be diverted to efficient power plants to reduce wastage.

KARACHI: Pakistan has the capability to overcome the circular debt issue within six months, if furnace oil and gas is diverted to efficient power plants, debts are recovered and power theft is stopped, said a high-ranking official of a leading independent power producer (IPP).

“There are some gas plants in the country that can produce double the amount of electricity with the same amount of gas that the obsolete power plants are producing presently,” he said on condition of anonymity. Apart from gas plants, there are furnace oil plants too that are inefficient, he added.

He said that the state-owned furnace oil plants are producing electricity at Rs22 to Rs28 per kilowatt-hours (kWh), a much higher cost compared to private plants that produce power in the range of Rs15-16 per kWh.

A few months ago, a group of eight IPPs took the government to the Supreme Court over the non-payment of their cumulative dues of Rs45 billion. Later in July 2012, the government agreed to pay the said amount in instalments. It paid Rs24 billion between July-September, equal instalments of Rs8 billion, and promised in November to pay the remaining Rs21 billion in nine instalments.

However, that did not materialise. The eight IPPs say that they were receiving just 57% of their full payments every month, while the receivables of these IPPs are piling up again due to the non-payment of remaining 43%.

Even after tariff increases, the circular debt is still climbing, the official said.

He said that if transmission losses can been brought down from 10% to 3%, then distribution losses too can be minimised if the government takes proper action against thieves.

Published in The Express Tribune, November 22^nd, 2012.