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Power tariff and defaulters

The Frontier PostEditorial

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 cannot go to the heaven of democracy at
normal price.

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