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Lever of power pricing

The lever of power pricing is in the hands of private power producers with whom PPP and PML-N governments made shady deals against the interest of the country and its people. Irrational power tariff slapped by thermal power producers ha rocked the economy, resulting in declining exports, and steep fall in the production of manufacturing sector. Doing business is getting tougher with each passing day. The power sector policy is now determined by the deals made with private power producing companies in Benazir second tenure of government and Nawaz Sharif third tenure.
Because of the kickbacks received at the time of finalizing agreements with private power producers, the electricity generated by their companies is the most expensive in this region. It will be right to say that electric power is being produced on paper instead of added to the national transmission system, as it is being generated in the record of power companies but it does not reach the national grid. The payment to power producers is made on their power plants generation capacity, which remain largely idle, rather than actual supply to the national grid. Is it not the bitter fruit of oligarchic so called democracy of PPP and PML-N the high price of which is being paid by the poor people of Pakistan in terms of highly inflated electricity bills and burden of default by political elite and business tycoon which has swelled to Rs. 850 billion? That is why the tall claim of previous PML-N government of adding 10600 megawatts (MW) power to the national grid dissolved in thin air and chronic problem of power outages refuses to go away.
Mindboggling calculations are made every minute in Pakistan to determine what amount each of these power produces would get from the national Kitty on generation capacity. The cost of idle capacity and actual addition of electricity to the distribution system should be calculated separately and if the payment is delayed, the financial cost—mark up upon due payments- make the third head. This third head is now the major issue for the relevant people in Islamabad. They kept mum over it till the end of PML-N government, the creator of this mess. Out of Rs. 571 billion circular debt, government paid Rs. 180 billion by the end of June 2018, which was long overdue. Only Rs. 80 billion were paid on account of power additions these producers made and Rs. 50 billion each was dished out for idle capacity and financial cost. It is worth mentioning that a close buddy of Nawaz Sharif Mian Mansha and an intimate friend of Asif Zardari also have greater financial stakes in private power producing companies. The companies do not allow audit of the cost of production of electricity they produce.
The three years old cycle of circular debt swelling, punctured now and then to allow it fireball again, has high jacked the public finance system. On the other hand it has pushed the cost of electricity beyond all probable reckoning. Power tariff is now 15 percent of textile exporters cost, who have never been hit so terminally. The textile mills owners are also hard hit by the exorbitant power tariff. Almost 50 percent textile industry is in a state of shutdown and 40 percent has relocated to Bangladesh because power tariff there is reasonably low.
The production lines of textile sector, which is leading component of manufacturing sector, have gone dormant and market forces surviving around it are having the biggest worry of history. The electricity cost has risen by the same percentage for other sectors as well, after private sector’s share in power generation became 10000 megawatts (MW). But textile is the leading foreign exchange earner which gives public finance managers additional worries. The private power producers are entirely “New specie” in Pakistan investment arteries. They were created by Benazir Bhutto and nurtured to greater extent by her government. They were then adopted by Nawaz Sharif and nourished them to become hydra headed monsters. They were greeted with a package no other investor dreamed about it in any other country. Did Nawaz Sharif government not see this coming? If it did how it would go about fire walling the export sector? The tax duty fiscal packages alone would never be enough to offset the negative impact of power pricing upswing.
The would-be finance minister in the new government said that electricity and gas tariffs will be brought down. Can it be done without changes in agreements with private power producers and LNG deal with Qatar? The repeated fiascos of losing cases against power produces in the international courts of arbitration have created a disappointing scenario. A legal remedy to clear the mess created in power by previous governments must be explored.

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