Engineer Arshad H Abbasi
Pakistan is in the midst of political and economic turmoil, with record inflation, primarily due to the high cost of electricity to the extent that it now not only challenging national sovereignty but also slowing down GDP to levels like never before. The majority of Pakistanis pay bills that are far higher than their average monthly incomes. The cost hike is all because of circular debt in the power sector.
In 2006, the threat of circular debt intensified the criminal oversight by the national power regulator, NEPRA. The main goal of NEPRA’s creation was to provide a steady supply of electricity at a reasonable price, but it was also intended to address other issues facing the power industry, such as system losses, growing expenses, high tariffs, and generation capacity constraints.
Regretfully, NEPRA has not only completely failed to meet its fundamental goals but has also ruined the nation financially. Basic math says that Pakistan could not be economically destroyed by its worst enemy in the four major wars it fought with India but one institution seems to leading the country into a financial disaster. The enemy kept Pakistan united during the wars but NEPRA has polarized the country. Where did NEPRA make a Himalayan blunder to destabilize the nation? Here is a summary of misdoings
In the year 2012, the complete roadmap was handed over to NEPRA to reduce circular debt to reduce T& D losses, now swollen to Rs 600 Bn. T& D losses could have been reduced to half without an investment of a single dollar. Almost 12 years gone NEPRA has failed to act on the solution and instead preferred to shift the burden to consumers. Another blunder horrendous crime is granting a license and keeping eyes closed on thermal power plants with low efficiency.
Roadmap, to retrofit Oil and Gas fired plants was briefly handed over. However, NEPRA paid no attention. Low-efficiency gas-fired plants hastened the depletion of gas reserves while simultaneously burdening consumers with excessive costs. To put it simply, a plant that operates at a high efficiency uses less fuel-gas, coal, or oil-to produce one unit of electricity.
However, NEPRA has continued to grant licenses to less efficient plants, which results in massive capacity payments. NEPRA came up with the simple solution of shifting the burden to the suffering public. The cost of solar, hydropower, wind, and coal power plants was never scrutinized according to global cost rates. This is one of the reasons the cost of electricity is higher in Pakistan.
My preaching at NEPRA was always on the technical audit to know the real efficiency versus the nameplate efficiency of the power plants but the entity ignored this advice and instead allowed a utility to run a plant at only 26%, whereas power plants with more than 62% efficacy remain underutilized. If the gas had been converted to a more efficient plant the cost of electricity would have been half. May this be a global record of the inefficiency of a regulator? Furthermore, NEPRA was unable to carry out the IPPs’ technical and forensic audit. Reasons for abandoning GENCO’s power plant retrofitting. Best known to NEPRA.
Unfortunately, establishing an institution in Pakistan always means corporate standard buildings, obtaining high salaries and benefits, posh cars, the newest laptops and cell phones, and complimentary amenities on par with those of Pakistan’s best companies. NEPRA’s best architecturally designed inspiring building in the capital, with incredible views of the Murree and Margala hills offers a great work environment. Probably, this environment is not available to the Nobel laureates. Using this ambient environment, NEPRA only gives the unfortunate country a recipe for disaster.
Exploiting the NEPRA Act, in the year FY 2022-3, the NEPRA score was 660 meetings of hearing to legitimize their decision by sharing responsibility for misdoing yet it is a lucrative business too by fetching TA/DA at the cost of -poor consumers. I kindly request that readers review the NEPRA annual reports, which disclose that the organization has evolved into a leisure club.
The best-equipped gym and auditorium in the NEPRA building provide year-round spectacular events, but customers pay heavy bills at the expense of their children’s education. Rather than concentrating on problems when examining the spectacular events, think back to the time when Rome was burning and the Roman emperor Nero was playing his flute. Not only did extravagant events and a lack of awareness of national assigned duties turn 250 million Pakistanis into haemolacria, but high electricity bills also led to many customers taking their own lives. For Pakistan, NEPRA itself turned out to be a Nero.
Yet the most hilarious act toward the nation is the start of CSR activities deviating from the original objective for which NEPRA was created. What a surprise the first prize awarded to the vertically integrated utility received the highest federal subsidy of Rs169bn. It is not a bad deal. Getting this huge, technically unjustified offered a few million to NEPRA to play the fiddle.
NEPRA is constantly planning events for publicity as Pakistan searches for ways to arrest the circular debt and reduce the cost of electricity. NEPRA’s yearly revenue in FY 2022-2023 is Rs 3 billion, but after unrestrained spending, that amount drops to Rs 623 million. It may surprise readers that NEPRA officials consistently receive the best training possible from international institutions but severely lacking in commitment and devotion turned NEPRA into Nero.
The worst crime NEPRA has committed is to grant new generation licenses during the last 4 years when the country has already over-installed capacity and consumption is constantly decreasing. It is unnoticed by NEPRA that the shifting of customers towards their home-based solar system is piling up enormous capacity payments.
The primary cause of the failure is the frequent pre-selection of NEPRA’s Chairman and members, who were never chosen based on merit. This catastrophe is also the result of government action, as evidenced by the NEPRA Act amendment to park retired bureaucrats. The plot to destabilize Pakistan economically, as envisioned by Dr. Bhashyam Kasturi, must be exposed and dismantled. To promote transparency and fairness it is time to integrate artificial intelligence into all power regulator businesses. GOP has to immediately cut off this parasite’s oxygen before replicating the collapse model USSR and Yugoslavia.
It is imperative – before the IMF lends more funds – to revamp blood-sucking institutions such as NEPRA and similar enterprises that are bleeding the country and weakening the faith consumers in the state. The sky will not fall if the bloodsucking NEPRA is shelved and superseded by a few credible experts. No funds will be enough before getting rid of these white elephants.
