Power sector woes
Prime Minister Imran Khan has directed the Ministry of Power to take urgent remedial measures to deal with the problem of power theft and mismanagement in the sector. For decades the people of this country have been subjected to gross public sector management. In the power sector in particular, mismanagement accounts for more than a trillion rupees in circular debt today, massive loans incurred by the power sector whose repayment is deferred when due with the interest payable by consumers and last, but not least, through poor selection of power generation projects that are either reliant on expensive fuel ( example furnace oil as well as LNG in comparison to say hydel) or located inappropriately far from the source of fuel ( coal- fired projects in Punjab). In addition, the transmission and distribution system is obsolete unable to vacate enhanced power supply and power theft remains unchecked whose burden is again borne by consumers through higher tariffs.
Subsidy through inter- disco tariff differential ( 105 billion rupees budgeted for Wapda/ Pepco and 15.4 billion rupees for KElectric in the current fiscal year) impacts on the budget deficit with a commensurate impact on inflation. An International Monetary Fund ( IMF) programme would imply pressure to reduce subsidies as a means to reduce the deficit, unless the government proposes a cut in other current, as opposed to development, expenditure, for example, a voluntary reduction on defence and civil service administration. The Punjab government has formed a task force under the chief minister to curb power theft and the relevant deputy commissioners have been tasked to crack down against power theft in their respective districts. And while the Prime Minister has directed other provinces to follow suit no such commitment has yet been forthcoming from Khyber Pakhtunkhwa in particular.
In this context, it is relevant to note that in May this year, the PML- N administration accused provinces of being responsible for failing to check power theft, estimated at 50 billion rupees ( July 2017- March 2018), and the then Power Minister Leghari claimed that Peshawar topped this list with 23.48 billion rupee theft, Lahore was responsible for 6.6 billion rupee theft, Multan 3.03 billion rupees, Faisalabad 1.5 billion rupees, Gujranwala 1.002 billion rupees and Islamabad 220 million rupees. A report prepared under the auspices of the Senate Committee on Circular Debt and authored by PTI Senator Shibli Faraz, estimated power theft of over 53 billion rupees during last fiscal year with transmission and distribution losses estimated at 187 billion rupees during the past five years.
Experts say there is sufficient evidence to show that the previous administrations particularly the PML- N, failed in improving governance which can largely be attributed to their failure to look at a sector's issues in a holistic manner and then proceed through a well- formulated business plan to deal with the prevailing issues. A viable plan was clearly lacking on a wide- range of mega projects, including the orange train, the metrobus service, where large sums of money were borrowed at a non- concessional high rate of return, the money was then used to hire the services and purchase equipment from the lending organisation compelling the government to provide a large annual subsidy to enable the people to actually use the facility.
The PTI government's stance reflects a mindset different from the past; however, if past precedence is anything to go by, the PTI administration may be stopped from taking such informed decisions after it goes on an IMF programme given the usual method of doing business in this country, i. e., passing on the cost of mismanagement and poor governance onto the public. One would hope that the Khan administration prepares and negotiates a plan to lower outlay on other non- development expenditure with the IMF.