Energy crisis: PM orders probe into theft, low payments to oil supplier

PEPCO paid only Rs50b to PSO out of Rs369b so far this year.

ISLAMABAD:

Caretaker Prime Minister Mir Hazar Khan Khoso has ordered an investigation into recovery of bills from power consumers, power theft, overbilling and less payment to fuel supplier.

According to sources, the premier has expressed shock over revelation that oil marketing company Pakistan State Oil (PSO) was paid Rs369 billion in the current financial year on account of fuel supply, of which Pakistan Electric Power Company (Pepco) gave only Rs50 billion.

Officials of the Ministry of Water and Power could not come up with a satisfactory response to clarify where the amount recovered from electricity consumers had gone if only Rs50 billion was paid to the fuel supplier.

In a meeting chaired by the prime minister here on Thursday, the Ministry of Finance disclosed that the power sector was consuming only 13% of its bills’ recovery to pay dues of the fuel supplier and the remaining 87% was covered through tariff subsidies.

“The finance ministry released Rs267 billion in subsidy until the end of March against the budgeted amount of Rs185 billion for the fiscal year,” secretary finance told the premier. According to projections, the figure will reach Rs291 billion by the end of June.



He questioned the rationale behind payment of a hefty amount to the fuel supplier from the tariff differential subsidy. He underlined the need for establishing an effective system for receipt of consumer bills and to ensure accountability.

During the meeting, the finance and petroleum ministries voiced concern over failure of the water and power ministry to put in place an effective system for the recovery of bills. The meeting was told that officials of power distributing companies were involved in overbilling to paint a better picture.

Meeting participants told the premier that PSO could not retire the letters of credit opened for the import of oil as it faced a financing shortfall of Rs11.3 billion. The financing requirement was Rs37.8 billion in March and Rs41.9 billion worth of oil was supplied to power companies.

Water and Power Development Authority (Wapda) Chairman Syed Raghib Ali Shah gave assurance to the meeting that cases would be registered against top officials of the power distribution companies if they were found involved in fake billing.

He pointed out that current power generation stood at 8,800 megawatts against demand for 12,000MW and the country was depending on oil-based power plants. “We need Rs105 billion to arrange fuel for power plants in the three months from April to June to reduce outages to the minimum,” he said.



Demand for electricity is expected to surge to 16,000MW in peak summer, prompting oil imports worth Rs105 to Rs120 billion to run power plants at full capacity. Production of power from high speed diesel costs Rs24 per unit.

The premier issued directives, asking the officials to slash line losses, control power theft and supply gas to power plants for producing cheap electricity. He also ordered initiation of a probe and ensuring accountability across the board in all power companies.

The petroleum ministry assured the meeting that PSO would provide oil, but at the same time the finance and water and power ministries should give the commitment that they would pay on time. The finance ministry agreed to release funds in upcoming months.

A four-member committee, comprising representatives of the ministries of water and power, finance and petroleum and headed by the PM’s principal secretary, had been constituted to review the performance of the entire power sector, collection of bills and less payment to the fuel supplier.

Published in The Express Tribune, April 6^th, 2013.

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