The Pak Banker

Poor performanc­e

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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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