Ministry warns of severe energy crisis

Published Feb 19, 2013 03:07am

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— File Photo

ISLAMABAD: Warning of a severe energy crisis in summer, the Ministry of Water and Power has informed a special sub-committee of parliament that energy crisis has become a national security issue that should be given the kind of attention the country’s security demands.

At a meeting of the committee here on Monday, the ministry conceded that despite injection of huge funds the performance of power sector had not improved.

Headed by Shahid Khaqan Abbasi, the sub-committee was formed to make specific recommendations for resolving of the power crisis, circular debt and non-recoveries and theft.

Musaddiq Khan, a joint secretary in the ministry and Managing Director of National Transmission and Dispatch Company (NTDC), told the committee that power shortage during the coming summer was anticipated to be quite serious.

Arshad Mirza, an additional secretary in the ministry, said subsidy in power sector was a serious issue. He recommended limiting the subsidy only to poor domestic consumers.

He opposed subsidy for all sectors of economy, bureaucrats and parliamentarians.

Mr Abbasi said the government had provided over Rs190 billion to the power sector in seven months and the amount would reach Rs350 billion by the end of the year. Subsidies in power sector had gone beyond the expenditure on running the entire federal government and soon it would surpass the defence budget, he added.

According to the National Electric Power Regulatory Authority, privatisation of distribution companies through initial public offering was the only solution to improve the condition of power companies in view of the involvement of independent shareholders and monitoring by the Securities and Exchange Commission of Pakistan.

Musaddiq Khan said the basic problem with distribution companies was political interference, adding that power crisis could be overcome in two to three months by appointing “right person for the right job”.

He said national interests were compromised in the privatisation of Karachi Electric Supply Company. The experiment of privatisation could not be successful in a monopolised environment, he said, adding that it could succeed only in a competitive environment where the management was removed when it failed to achieve targets.

When Mr Abbasi asked if the power sector had shown any improvement after the investment of Rs350-400 billion per year, Mr Mirza said there was no improvement in practical terms even though the ministry was now focusing on administrative corrections.

Joint Secretary Zargham Eshaq Khan said almost all sectors of economy — domestic, commercial, industrial and agriculture — were being provided subsidy in power sector the total impact of which had now been estimated at Rs215.632 billion for the current year.

He said domestic consumers were being provided about Rs1.80 per unit subsidy that worked out at Rs57.5 billion. Commercial consumers enjoyed Rs2.09 per unit subsidy involving a financial impact of Rs10.44 billion while industrial consumers were getting Rs1.10 per unit subsidy involving a total amount of Rs20.88 billion. Agriculture consumers on an average enjoyed a subsidy of Rs2.57 per unit or Rs12.352 billion.

Mr Abbasi said some private producers were interested in selling electricity directly to consumers but government rules did not allow them to do so.


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