In addition to administrative and punitive measures, the government has now decided to curb the menace electricity theft with the implementation of advance metering project which was shelved by the previous government merely for political reasons. The Asian Development Bank had approved a loan of $ 5 billion for the modernization of 45 years old and worn out power transmission and distribution system in March 2015. Commitment charges are being paid on it. Out of this loan an amount of $ 990 million were to be spent on the installation of 2 million smart meters in the jurisdiction of Islamabad Electric Supply Company (IESCO) and Lahore Electric Supply Company (LESCO).
The project of advanced metering was conceived to reduce distribution losses, improve revenue collection, enhance the capacity of load control and load management system, ensure provision of automated consumption data, modernize the billing system and ensure 100 percent collection of bills. The previous government wanted to privitise the power distribution companies but could not fulfill the prerequisite of listing these companies on the stock exchange. The privitisation of power distribution companies was agreed as condition with International Monetary Fund at the time of availing $ 6.2 billion bailout package in 2013. Had this condition been met the political elite would have lost the leverage over these entities for bills default and electricity theft. Hence the condition was not implemented. Likewise, it was decided in November, 2017 to put on hold the Asian Development Bank suggested smart meter project. The already announced bidding process for the installation of smart meters for the consumers of IESCO and LESCO was cancelled. Now the Planning Division has decided to revive this project.
The electro-cure technology of smart meters will be instrumental in curbing the menace of direct electricity connection through hooks. But the revenue collection will improve only when this technology is injected in the power distribution companies in the jurisdiction of which power pilferage is widespread. The electricity theft among the consumers of IESCO and LRSCO is negligible. The technology will help overcome the menace of bills default in future but the recovery of already accumulated one of Rs. 870 billion will need a strong spine on the part of the government. It will also not provide a solution for the piling of circular debt unless a legal solution for reviewing the power purchase agreements with IPPS is found out and diesel fired thermal power plants are converted to gas. Similarly, the agreements made with Chinese companies for coal based power generation will further compound the issue of circular debt. Capital expenditure for coal project was about 40 percent higher than the international cost and the agreed per unit tariff of 8.4 cent is higher than the 5 cents paid in other developing countries. The hydropower projects which are being completed by Chinese will alarmingly raise the power tariff in future. Because of heavy capital expenditure and inflated tariffs.
Power sector urgently needs drastic reforms aimed lowering the power tariff if the government earnestly want to boost the productive capacity of the economy. The focus should shift on more competitive projects like wind, solar-wind and hybrid and hydel. There is a dire need of injecting 10000 megawatt low cost electricity to substantially bring down the current sky-high power tariff and reduce fuel imports.