Prime Minister Jamali’s resolve and eventual directions have resulted in a rare but true reduction in electricity rates of paisas 12 per unit a fortnight ago.

A small but most telling news item, in its innocence, did tell us that this cut was anyway due — because of the cut in the international oil prices as a part of the quarterly automatic fuel adjustment mechanism.

As predicted, this step unleashed a cacophony which is vying to be heard resulting in head lines such as, ‘power tariff cut not to hurt Wapda’; ‘tariff cut: Wapda needs compensation to offset the Rs3 bn loss’; ‘power tariff increase not viable, says the IMf’; and last but not the least—rather very damaging— ‘88-paisa cut in power tariff possible; a story leaked by Wapda’ itself where in the PM’s reduction is dubbed as politically motivated and a hasty step.

This heading is then followed by as many as four options. These options as is wont of a perpetually loss-making Wapda, outline what the government could do to effect reduction in power tariff, which primarily consists of capping the fuel oil prices at Rs10,000 per ton against the present Rs11,500 or so (maximum of Rs13,500 once), exempting GST and the withholding taxes on what is leaked as the present unprotected categories of (consumers, swapping debt to equity and the provision of extra gas and capping the same at Rs125 per MCH.

This leak, however, forgets to tell the press as to what Wapda plans to do or contribute towards the PM’s plan to help the poor electricity consumers. In other words, Wapda simply shows its inability to do anything. On the other hand this monolith has the nerve to sabotage the GOP’s resolve. Indeed, an issue requiring strict action to curb this maverick and irresponsible behaviour. It would be worthwhile to compare this behaviour with other rogue elements of the government.

Coming to the hard facts confirmed by the World Bank on December 14, we see that Wapda on the way to a Rs30 billion loss or shortfall for the FY 2002-03, which eventually would have to be borne by the GOP in the shape of deferred debt service payments. Accordingly, the World Bank expressed its concern over Wapda’s financial performance which had broken all records during the last FY 2001-02 with a Rs41 billion loss tag. On the other hand the latest paisas 12 per unit reduction is likely to cost Wapda another R8.5 billion and thus the deficit for FY 2002-03 is likely to surpass Rs35 billion. As Wapda’s army management has time and again shown its inability to do anything to stem the loss, but’ for help from the GOP, its time to dwell on the possibility of any reduction of electricity rates. The question remains whether it is a reality or would it ever remain a dream.

Experts are of the opinion that a substantial reduction can take place provided the present management in Wapda and the KESC is changed (Dawn of Dec 10? 2002). Experts are of the opinion that this step has to precede all else- specially because of the non-performing years, 1998 to 2002. According to experts the last FY’s revenue of Rs153.5 bn needs to be beefed up to about Rs200 billion, while the last expenditure of Rs194.5 billion would need to be brought down to as low as Rs175 billion— a target not impossible to achieve.

The above can be done in a concerted manner firstly through the implementation of a loss reduction plan leading to a 5 per cent drop in the present line loss level of 25.8 per cent (ending 2001-02). This is envisaged to drop so in about 18 months with an expenditure of Rs10 billion and a minimum return of Rs15 billion the plan entails efforts to stem theft and loss of electricity through vigilance, required security for metering equipments, implementation of technical instructions and specifications and proper posting of staff etc. In addition, this plan also envisages revamping of the presently dilapidated LD and T&G networks.

Secondly, receivables amounting to Rs54 billion need to be recovered. As the same have increased from the figure of Rs43 billion as on 1.07.98 to the above amount and that too after at - source deductions amounting to over Rs45 billion and write-off of about Rs20 billion (during 1998-02), it must be recognized that the present set-up cannot effect any decrease. As such the need is to adopt newer methods. Professionals with the required level of expertise are fortunately available. As much as Rs20 billion can be garnered under this head in the very first year of correct operations, while the utopian goal of zero arrears or receivables too can be achieved in about 24 months.

However, it needs to be settled that Wapda’s recent move dubbed as a facility for its beleaguered customers regarding waive-off of up to 50 per cent of five year old arrears is inherently wrong and an effort to hide the inefficiency of the last four years of operations—specially so when these very arrears were only an year-old when the army management took over during October 98. Similarly, allowing up to 12 per cent of recoveries for Wapda employees is again wrong specially so when such incentives elsewhere have resulted in more corruption and inequalities. Here allowing special allowance to field personal posted in the DISCO subdivisions in the first place and for the divisional staff in the second one would be more beneficial and appropriate. Recovery effort has thus to be sustained and in the shape of a definite project — this, if taken up as a routine at least for the present, will not serve any purpose.

Besides reducing losses and recovering arrears and what is dubbed as the receivables, would follow implementation of schemes to arrange for additional revenues. These, in accordance with any up to the mark utility operation, would be the much needed improvement in billing at the revenue offices, regularization of illegal extensions in case of the two-part tariff costumers, the adoption of the concept of the customer paying for his share of technical losses, replacement of defective and below mark meters / metering packages and lastly state of art metering package for plazas, markets, commercial areas and other close proximity customers. All this would lead to an expected savings of at least Rs25 billion per year.

Along side would come the much needed revamping of the planning and design arrangements. The present wrong and unimaginative personnel packed in these offices would need to go for replacement with appropriate staff. The DISCOs would once again be required to accept advice from these setups for all technical work, instead of the current weak emissions from the lame duck setups at the DISCO level.

Concurrently are recommendations to upgrade the existing human resource (HR) through offering of short/degree/post-graduate courses to officers, specially engineers. Benefits out of this scheme of things cannot be gauged, but fact of the matter remains that all this would be of great intrinsic value leading to long term commitment and a better level of human resource for the utility. Moreover, this would be different from the present low morale and no commitment at all.

Though it would be asking too much, but in view of the present rot and the limitless efforts to correct, there is a strong need for Wapda’s restructuring to be revisited and even re-thought in some cases. Some of the experts even recommend reversion to Wapda first before anything new is taken up.

The show windows of Wapda viz sub divisions and the revenue offices need immediate up-gradation, but the belated concept of creation of model offices is simply trite. Here a detailed checklist needs to be prepared- while up-gradation would start taking place in accordance with laid down priorities. This is expected to lead to a saving in expenditures up to Rs10 billion because of better efficiency, optimum use of equipment, continuity of supply, customer service, less technical losses, better billing and satisfied employees. This probably is the most important of the steps needed to be undertaken in order to ensure that Wapda attains the required level of profitability leading to the goal of reduction of tariff. Again this aspect of the tariff reduction plan depends on the formulation of a definite road map and attainment of the various destinations in a specific time frame which has to be within twelve months or so.

Alongside, the seven points enumerated above would be the immediate BMR of the Wapda power houses-both thermal and the hydel on war footing. Some part of the envisaged activity is under way these days’ however, it is too little and too late. Actually three and a half years have been wasted. With the BMR would be the effort to attain maximum efficiency of the plants, immediate conversion of the FO based thermal plants to gas-fired mode and the revamping of the present trite EDO. This would lead to saving of up to Rs27.5 billion i.e. up to Rs20 billion on account of the BMR, Rs7 billion on account of the conversion and up to Rs2.5 billion through a revamped/redone EDO. In case only 150 MW FBC Lakra Power Station is fully brought to the bar, as much as Rs1 billion. can be saved - so much remains the potential.

The ninth concurrent activity would be the total revamping of Wapda’s internal audit. At present the most backward of all setups in Wapda is the internal audit setups. The present concoction needs to be beefed up with deputations from the AGP’s with total redone rooster of duties. The present unchecked operations too need to be placed under control and with a specific goal to check inefficiencies in the field operations, misuse and leakages. This facet alone along with improved revenue office operations has the potential to yield up to an extra Rs. 10 billion each year.

We would also arrange reduction of the current level of expenditure through adopting the novel concept of intra-formation inspections, technical audit, project management techniques, special attention to the IPP purchases and more and specific inspections and visits by Wapda HQ experts. It would not be out of place to mention that between Rs2.5 to 5 billion can be saved each year by adopting the first and the second of the above listed schemes, while up to Rs20 billion can be saved in project expenditures, up to Rs30 billion on account of stunted IPP purchases and as much as up to Rs5 billion on account of proper and at present missing inspections and visits alone. However, the, Chairman would have to limit his excursions as his present absence from the HQ is leading to losses.

Adding up all the potential benefits, we see a saving of Rs75 billion each year due to enhanced revenue and controlled expenditures. As all schemes have to cater for unforeseen etc., we would be able to ensure a saving of up to Rs50 billion, which would easily cover the expected loses of Wapda for FY 2002-03 and the financial depth needed to effect reduction in electricity rates up to 20 per cent. It, however, is once again reiterated that the above is only possible through highly qualified and professional management teams for both Wapda and the KESC. At the same time the various ministries too would have to come out of their cocoons and start contributing. In fact, working of Wapda and the DISC needs to be regulated very strongly.

Concluding this study, it is very pertinent to state that the above-mentioned points / items are independent projects but need to be implemented concurrently. We would have to do all these things and the idea that emphasis on one can exclude the need for emphasis on the other, is wrong. Actually all these are a part and parcel of any up-to-mark utility operations—-absence, unfortunately is a mark of mediocrity.

The writer is a former member- Power, Wapda.