Government claims power sector improvement

Subsidy for power sector reduced from Rs334b in 2012-13 t o Rs221b in 2015

ISLAMABAD: The water and power ministry on Monday said that an audit report submitted to the president by the Auditor General of Pakistan (AGP) related to the tenure of the previous government. It went on to claim that the incumbent regime had helped improve the overall power generation in the country, in addition to lowering the subsidy pumped into the sector.

In a statement, the ministry said that the energy sector was in crisis in 2013. Facing a power generation deficit of around 6,000MW, heavy industrial and domestic load-shedding, in addition to line losses and financial deficit had caused heavy losses to the public exchequer.

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Further, poor management had resulted in the lack of planning to deal with heavy loads, causing unpredictable load-shedding and a burden on fiscal resources.



On the other hand, the ministry claimed that the incumbent government had undertaken major power sector reforms including improved monitoring and control mechanism, strict adherence to merit policy for power generation using efficient plants first, improving payments to the IPPs, gas companies, PSO etc, better recoveries, lower line losses, better financial management and rationalisation of subsidies.

The government also optimized the performance of GENCOs and maximized IPP plants for summers. As a result, the state was able to utilise nearly 90 per cent of its installed capacity in 2015, to generate a record 16,890 MW of power.

Domestic load-shedding, it claimed, was down from eight to 11 hours to between six and eight hours. Industrial load-shedding, it claimed,had largely been addressed.

Further, the government has identified high power theft areas by bringing all DISCO collection to CPPA.

This has allowed the government to pay its bills, retiring 101 per cent of its outstanding amount to Pakistan State Oil during 2014-15 as compared to 77 per cent during 2013-14. IPPs received 102 per cent in 2014-15 as compared to 85 per cent during 2013-14 and gas companies 106 per cent in 2014-15 as compared to 104 per cent in 2013-14.

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The government has also lowered its subsidy to the power sector. From doling out Rs334 billion In 2012-13,or 2.4 per cent of the GDP, it was down to Rs292 billion in 2013-14 – 1.7 per cent per year. The subsidy further fell to Rs221 billion in 2014-15 -- 0.76 per cent of GDP.

The ministry claimed that it had curtailed the rise in circular debt from Rs203 billion in 2013-14 (0.7 per cent of GDP), to just Rs49 billion in 2014-15 — 0.17 per cent of GDP.

The statement added that the government had instituted new policies to facilitate investment in the power sector.

Published in The Express Tribune, September 22^nd,   2015.