Poor per­for­mance

The Pak Banker - - 4EDITORIAL -

AT a meet­ing held re­cently in the Min­istry of Wa­ter and Power to as­sess the per­for­mance of power dis­tri­bu­tion com­pa­nies, it was found that de­spite re­peated ef­forts, there has been no im­prove­ment in their work­ing. Worse still, even the ef­fi­cient ones have started go­ing down be­cause of unchecked elec­tric­ity theft. Pre­vi­ous records show that the per­for­mance of dis­tri­bu­tion com­pa­nies in Sindh, Balochis­tan and Khy­ber-Pakhtunkhwa have been poor since long, but now those in Punjab are also not do­ing well.

Dur­ing the meet­ing, it was noted that the col­lec­tion of con­sumer bills by Lesco was very poor and losses are far higher than the set tar­get. Gen­er­ally, no FIR is lodged against the power thieves, in­di­cat­ing lack of in­ter­est on the part of man­age­ment to re­duce trans­mis­sion and dis­tri­bu­tion losses. Eval­u­at­ing the per­for­mance of Lesco, the meet­ing noted that no anal­y­sis was car­ried out about the top 10 cur­rent and pre­vi­ous de­fault­ers or ad­just­ment made. A hefty amount was out­stand­ing un­der the head of ' run­ning' and ' de­ferred' de­fault­ers and for its re­cov­ery the com­pany was di­rected to launch a spe­cial cam­paign. The same state of af­fairs was found to pre­vail in the case of Mepco and Fesco. In the course of dis­cus­sions it also came up that there were some feed­ers where losses were more than 20%. All com­pa­nies were also asked to cut trans­mis­sion and dis­tri­bu­tion losses in line with the tar­get given by the Na­tional Elec­tric Power Reg­u­la­tory Au­thor­ity. Show-cause no­tices were also is­sued to five dis­tri­bu­tion com­pa­nies for their in­abil­ity to con­trol elec­tric­ity theft and im­prove col­lec­tion of con­sumer bills.

There are many com­plex fac­tors in­volved in the poor per­for­mance of the power sec­tor. Ac­cord­ing to ex­perts, a key rea­son is the ap­point­ment of heads of power dis­tri­bu­tion com­pa­nies on po­lit­i­cal con­sid­er­a­tions, ig­nor­ing the con­sid­er­a­tions of merit and ex­per­tise. Cor­rup­tion and in­ef­fi­ciency are ram­pant from top to bot­tom of which the big­gest ex­am­ple is the fail­ure to check theft and bring down line losses which are among the high­est in the world. It was dis­closed in a re­port some time back that though funds have been avail­able for power com­pa­nies to im­prove their per­for­mance, the min­istries deal­ing with energy is­sues fared poorly and utilised the money at a sig­nif­i­cantly slow pace. This has stood in the way of ex­e­cut­ing vi­tal power projects de­signed to in­crease power gen­er­a­tion to curb out­ages. Other ma­jor prob­lems iden­ti­fied in the meet­ing re­lated to late ap­proval of pro­ject plans, de­lay in the com­ple­tion of bid­ding process, award of con­tract, is­suance of letters of credit and open­ing of bank ac­counts by pro­ject author­i­ties. All this has bur­dened the na­tional ex­che­quer with mil­lions of ru­pees in the form of com­mit­ment charges on loans.

At a re­cent pre­sen­ta­tion on for­eign as­sis­tance for the power sec­tor, it was dis­closed that the avail­able de­vel­op­ment as­sis­tance port­fo­lio to­talled $27.86 bil­lion for 185 projects as of May 31, 2015. Of this, only $9.143 bil­lion (32.78%) was utilised whereas $18.722 bil­lion (67.2%) re­mained undis­bursed. For­eign fi­nanc­ing for the power sec­tor stood at $15.157 bil­lion, of which only $3.591 bil­lion (23%) was utilised. Need­less to say, the re­spon­si­bil­ity for de­lay in the util­i­sa­tion of funds lies squarely on the min­istries and ex­e­cut­ing agen­cies con­cerned which should be called to ac­count. Since the slow spend­ing of for­eign funds re­sults from poor plan­ning of pro­ject ac­tiv­i­ties, it is im­por­tant that pro­ject man­age­ment units should be made fully func­tion­ing by the time loans are pro­vided. The bid­ding process should be com­pleted within the stip­u­lated time so that the sched­uled start of work is not dis­turbed. An ef­fec­tive re­sponse to the prob­lem will be to set up a spe­cial mon­i­tor­ing cell to re­port any de­lay in dis­burse­ment and uti­liza­tion of funds di­rectly to the Prime Min­is­ter.

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