Without mincing words it may be said that the recently released book by the Woodrow Wilson International Center for Scholars tells half truth. It may have rightly identified the key impediments that are: poor governance, incompetence, lack of transparency, distribution and transmission losses but completely ignored the contribution of nuclear power plants. After filling many of the missing blanks the story can become more authentic. The ambiguities have been created because those involved in collecting data have provided incorrect information and interviewers mostly relied on ‘official spokesman’ and those having vested interest.
The report puts cost of generation at Rs14 that is incorrect, if not completely wrong. May be, it has used the numbers from the most inefficient public sector GENCOS. Out of its stated 22,000MW generated capacity over, over 6,500MW comes from hydel costing less than Rs2 per units. Another 8,500MW comes from IPPs, mainly from HUBCO and KAPCO and nearly 650MW from nuclear power plant (having no mention in the report). The real culprits are GENCOS operating in the public sector having over 4,800MW capacity but at the best can deliver around 1,200MW. Some of the units are not operated due to higher cost of generation or fall under ‘undependable capacity’.
Dr Musadik Malik, advises Prime Minister Nawaz Sharif on energy, has stated incorrect number about recovery. While he says the recovery rate ranges between 80 to 90 per cent, the average recovery of DISCOS is around 30 percent because 40 percent is pilfered and another 30 percent adds to receivable. Therefore, it may be inferred the real culprits are DISCOS and not the GENCOS. DISCOS suffer because public sector entities, business tycoons and politicians are the biggest pilferers/defaulters.
Wilson Center’s narration about K-Electric is also incorrect, may be the details were fed by those who oppose privatization of electric utilities. The allegation that it has failed in adding new capacity is malicious. It has certainly added new capacity but suffers mainly because it could not remove illegal connections and recover outstanding dues from public sector entities. However, it is true when it does not get gas; it shuts down some of its generators. The shortfall increases when 650MW being supplied by NTDC is disrrupted.
Overcoming much talked about circular debt is manageable if there is commitment to curb theft and recover overdue amounts. Containing one percent pilferage adds to Rs1.5 billion to collection per day. Therefore, the immediate focus should be on improving performance of DISCOS rather than adding new generation capacity. Actual generation hovers around 15,000MW as against an installed capacity admitted to be 22,000MW by the Editor of the report because of non-availability of fuel or badly maintained power plants operating in the public sector.
Persistent hike in tariffs, in the name of recovery of full cost has failed in increasing cash flows of DISCOS because those paying the bills also indulge in pilferage saying, why should we pay the bills of pilferers? This pilferage is going on with the connivance of staff of utility companies, enjoying patronage by those have access to power corridors.
The government has to first put its house in order by ensuring all the members of Senate, National and Provincial Assemblies pay their bills in time and public sector and semi public entities also clear all the outstanding amounts. Recovery can be made simply by making deduction at source.
Circular debt, recovery by DISCOS, cost of generation, pilferage, overdue amounts,