Power sector: IMF expresses displeasure at rollback of reforms

Lending agency, Pakistan to hold talks early next month.

ISLAMABAD:

The International Monetary Fund (IMF) has expressed its displeasure over rollback of power sector reforms and its team will hold talks with Pakistani officials in the first week of April where power sector reforms will be on top of the agenda, sources say.

Just a few days before leaving office this month, former prime minister Raja Pervez Ashraf had placed the entire power sector under the administrative control of Water and Power Development Authority (Wapda) chairman.

According to sources in the Ministry of Water and Power, donors had expressed strong reservations after the Pakistan Peoples Party-led government gave discretionary powers to Wapda Chairman Syed Raghib Ali Shah by placing state-run power companies under his administrative control.

Under power sector reforms, the government was required to dissolve Pakistan Electric Power Company (Pepco) and give autonomy to power distribution companies (Discos) with independent boards of directors. However, the government established a parallel company – Genco Holding Limited – to monitor power firms and Naveed Ismail was hired as managing director at a hefty package of Rs1.9 million per month. He was sacked after the PPP government left.

The government also failed to grant autonomy to power firms and these companies were headed by people appointed on political grounds.

Talking to The Express Tribune, an official of the water and power ministry dismissed the talk that reforms had been put on the back burner and stressed that the Wapda chief took over control of the power sector to bring improvement and address issues of bad governance.

“After taking charge, the Wapda chief fired Genco Holding managing director Naveed Ismail and many heads of distribution companies are also likely to be sacked because of poor performance,” the official said.

He was of the view that the PPP government had left power companies in a worst state as their payables swelled from Rs125 billion on June 30, 2010 to Rs435 billion at present. Receivables of the companies have jumped from Rs185 billion on June 30, 2010 to Rs425 billion, raising the spectre of collapse of the energy sector.

Though transmission and distribution losses of power companies have dropped to 19.2% from 20.5% earlier, the official claimed that cases of fake billing have been found which have actually contributed to the reduction in losses.

“Heads of Lahore, Gujranwala, Hyderabad and Peshawar power supplying companies may be removed after the sacking of Genco Holding MD,” a source close to the Wapda chairman said.

Published in The Express Tribune, March 31^st, 2013.

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