Power tariff and defaulters

Instead of taking strong action against electricity bill defaulters, comprising influential politicians, business tycoons and government departments a merciless policy of shifting the burden to the consumers who honestly and regularly pay their monthly power consumption bills is being implemented.The menace becomes a hydra headed monster in elected governments. This recipe of encouraging dishonesty and animosity towards poor people was invented by a longest serving blue eyed guy federal finance secretary, who is now retired but his ghost seems to be still present in decision making about power sector.

The Central Power Purchasing Agency (CPPA) has recommended to the power regulatory authority to increase tariff by rs.1.32 per unit for consumers aimed at recovering Rs. 78.66 billion from next month and onwards. The actual increase in power tariff will be around Rs. 2 per unit after addition of proportionate increase in sale tax and four different surcharges.

The state owned power purchasing agency made the recommendation to adjust fuel charges in tariff for power produced and sold to the consumers nationwide, except K Electric. In this regard the National Electric Power regulatory authority (NEPRA) has scheduled a hearing for all stakeholders on June 27, Wednesday. The CPPA has argued the fuel cost in tariff has increased to Rs. 6.61 per Kilowatt hour over the reference fuel cost of Rs. 5.29 in the approved tariff for consumers of the state owned distribution companies for 2015-16.

Apparently surge in fuel cost is, unbelievably, attributed to massive drop in hydel power production due decrease in water flow in storage dams last month. But snow melting in catchment areas has started and the water flow is increase. Hence decline in hydel power production alone does not justify jacking up power tariff. The major factors are the shady deals for LNG import from Qatar and that of Coal from China at very inflated prices.

The fact of the matters is that the experiment of producing a relatively inexpensive power from RLNG as compared with expensive furnace oil and diesel proved counterproductive and costly. The cost of the power generation from imported gas is three times higher at Rs. 12. 47 per unit compared to the locally produced gas at Rs.4.84 per unit. The previous government increased its reliance on the imported gas and set up several power production plants in the country. The production from imported gas increased to1468.85 GWH against the earlier generation potential of 237.6 GWH. The cost of power generation from imported coal also went up. It is pertinent to mention that the price of coal is imported from China is higher than the best quality coal which cement factories’ owners import from South Africa for mixing it with the local variety to run their kilns. That is why the cost of power production also surged from Rs. 5.76 to R. 11 per unit.

Apart from the rise in the prices of furnace oil and coal, billions of rupees are have accumulated as receivable from the federal and provincial government departments and influential defaulters. The PML-N government left receivables from defaulters amounting to Rs. 851 billion. According to audit figures compiled a few days ago, receivables from power defaulters stood at Rs. 729 billion in June 2017, which jumped to Rs. 851 billion by end of April 2018 weighing heavily on the power sector.

The federal government is a defaulter of Rs. 9.24 billion, provincial government owes Rs.115 billion to power distribution companies. The receivables from the government Azad Kashmir have swelled to Rs.95.87 billion. Likewise, the province of Baluchistan is defaulter of Rs. 224 billion on account of agriculture tube wells alone.

Rather than improving governance in power sector and streaming the recovery of electricity bills, the PML-N government imposed surcharges to reduce power sector losses by victimizing the consumers who regularly pay their bills. During its tenure the previous government burdened power consumers with surcharges of Rs.2.3 per unit that inflated the monthly electricity bills, leaving a set of challenges for the power sector in future.

Despite the levy of surcharges and dip in crude oil price a few years ago, the circular debt in energy chain still poses a threat to the upcoming government in which the majority of parliamentarians will be same old horses who are fond of defaulting electricity and gas bills besides bank loans defaults and waivers. The major factor in the one trillion rupees circular debt is the capacity charges clause in the agreements with private sector power producers that were signed in the second tenure of Benazir Bhutto government. Fair enough the poor people of Pakistan can not go to the heaven of democracy at normal price.



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