THERE seems to be no respite from the country’s power crisis that has been ongoing for eight years now. Experts and the general public alike continue to discuss load-shedding and power sector receivables and payables. They believe the federal government is plagued with low recoveries which prevents it from fully paying the power generation companies, resulting in load-shedding.

Let’s work from the ground up: we know that the total power sector receivables (except those due to K-Electric) have reached an astounding Rs513 billion and the total amount it owes to other entities is above Rs300bn. Last year, the government retired power sector dues of Rs500bn. The payables are on account of non-payment to oil marketing companies, gas utility companies, generation companies, the Water and Power Development Authority and independent power projects.

Governments are not paying their power dues.

The total amount the government and its agencies owe is Rs176.22bn to the power sector. If we add what the privatised K-Electric owes to the National Transmission and Des­patch Company (NTDC) the figure jumps to Rs211.42bn.

Before we attempt to understand why governments do not meet their payment obligations, it is important to note the amount each defaulting government owes.

The federal government, including the local bodies, the defence ministry and even the water and power ministry itself, owes Rs8.80bn to the distribution companies (DISCOs). The federal government along with the Azad Jammu and Kashmir government is also responsible for non-payment of bills by the AJK government, amounting to Rs37bn.

The four provinces, their line departments and other agencies have unpaid electricity bills totalling Rs87.256bn. Here, the government of Sindh leads the pack with a debt of nearly Rs55bn.

The federal government is further responsible for non-payment of roughly Rs32bn by Fata’s domestic consumers. This amount is the differential between the actual billing by the Tribal Areas Electric Supply Company and the budgeted payments by the federal government each year. This figure is bound to swell as the national budget for 2014-2015 only allows subsidies worth Rs8bn for Fata, even though the yearly billing is approximately Rs14bn. Next are the nearly Rs11bn worth of subsidies for tube wells in Balochistan.

K-Electric, on the other hand, simply links the payments due for the 650MW it receives from NTDC to the perceived and actual outstanding payments owed to it by the federal government and the government of Sindh and to the tariff differential subsidies to be released by the Sindh government.

Why is it that the federal and provincial governments do not pay their bills? One cause is the general apathy and non-serious attitude towards clearing payments. Furthermore, while unveiling the 2014-2015 budget, the Sindh government realised that the budgeting for electricity bills was inadequate.

Additionally, government consumers are not treated as regular customers by utility providers; they are not subjected to disconnection when they default on payment. This leads to complacency, and arrears are challenged by the government as being inflated and incorrect. The rule that objections against bills have to be raised before the stipulated payment date is not followed.

In order to deal with such issues, the office of the federal adjuster was set up under the General Financial Rules; unfortunately, this became dormant in the 2000s. In late 2009, the office was revived and given the mandate to resolve the Hyderabad Electric Supply Company’s (Hesco) outstanding amount owed by the Sindh government.

As per the law, the federal adjuster can deduct only reconciled provincial dues, but has the power to adjudicate as an arbitrator in case of a stalemate. At the verge of de­­ducting federal outlays to settle the Sindh government’s electricity bills, the latter secured a stay order from the Sindh High Court in mid-2010. Thereafter, even when a decision was made in favour of Hesco, the government of Sindh didn’t budge, in fact, it was able to arrange a write-off of bills worth more than Rs20bn in April 2013.

The most recent decision of the Council of Common Interests to deduct 25pc from the total electricity bills of the provinces in advance from the federal outlays is appreciable, but it does not solve the long-festering issue.

It is suggested that all governments and their entities should be required to fully budget for their power needs, cut down on the rampant unauthorised use of power, implement conservation and energy efficiency measures, empower DISCOs to treat government consumers as regular customers who are subject to disconnection on default and non-reconnection in case of continued default, and lastly introduce appropriate changes in the Electricity Act.

Additionally, it should be mandatory that billing complaints be lodged within the stipulated period. If these changes are not implemented the power sector will be unable to perform to its capacity and to ensure full recoveries from the private sector.

The writer is the president of the Institution of Electrical & Electronics Engineers Pakistan.

Published in Dawn, June 19th, 2014