Govt to outsource security of energy installations, oil logistics

May also hand over operation of power generation companies

ISLAMABAD: The government has decided, in principle, to outsource the security of energy installations, oil logistics as well as operation and maintenance of state-owned power generation companies.

The decision came in the wake of damage caused to heavy power transmission lines in Balochistan by militants, leading to blackouts across the country. The security of oil logistics will be outsourced in a bid to curb the theft of oil valuing millions of rupees. According to estimates, furnace oil worth $200 million is stolen every year.

The previous government of Pakistan Peoples Party (PPP) had also tried to outsource operations and maintenance of power distribution companies to cope with the mounting losses. However, strong protests by employees of the Water and Power Development Authority (Wapda) forced it to abandon the plan.

The PPP government also attempted to outsource operations and maintenance of power generation companies in order to recoup the lost capacity, but could not push ahead with the plan in this area too.

Now, the present government has also come up with a proposal to outsource the operation and maintenance of those state-run power generation companies that have very low efficiency levels.

At present, the government owns five thermal power generation companies, each of which is in dire financial straits. These include the 650-megawatt plant in Jamshoro, 800MW Guddu plant, 1,000MW Muzaffargarh plant, 30MW Lakhra plant and a power plant currently being constructed in Nandipur.

The government is also in the process of privatising power distribution companies in an effort to avoid the uncontrollable circular debt caused by power theft and high transmission and distribution losses. Officials are of the view that the power distribution and generation companies should be privatised as soon as possible since there is no other way to rebuild and revive the faltering system.

Power distribution companies have come in for a lot of criticism because of a lack of efficiency and swallowing billions of rupees in subsidies as the Ministry of Finance argues that it is not fair for a sector performing below par to take out such a huge amount from government coffers every year.

The ministry is of the view that the government has been bearing the burden of circular debt since 2007 and suggests that it is not appropriate at all that an inefficient sector costs the exchequer billions of rupees annually.

The previous and present governments have been sending cases of power defaulters to the National Accountability Bureau (NAB), but conditions have not improved.

The present government has also recently announced an amnesty scheme to recover billions of rupees from the defaulters in order to lessen the burden on state finances.

Published in The Express Tribune, July 18^th,  2015.

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