ISLAMABAD: In a report the National Electric Power Regulatory Authority (Nepra) has asked the government to charge different tariffs from different distribution companies (Discos), instead of imposing equalisation surcharges.
Different tariffs needed to be introduced for different Discos according to the calculations made by Nepra, the regulator said, adding the companies with poor performance should be given a timeframe to come at par with the better performers.
Nepra said it was imperative that tariff structure reflected the actual cost of electricity generation and service delivery. “...It is unfair to burden the consumers with cost escalations due to policies that are not pragmatic and (because of) poor operational efficiency, theft and losses.”
The government had been urged to control pilferage of oil and gas in public-sector generation companies and the logistics network to ensure maximum energy output, Nepra said. Efforts should be made to keep the tariff in line with the cost of generation and not to allow circular debt to resurface time and again.
Nepra advised the government to launch rehabilitation of state-owned power plants “on a war footing” to improve efficiency of the ailing power sector. It also pointed to the huge spare capacity in the generation system.
In its annual report submitted to the federal government and the Council of Common Interests, Nepra pointed out that the power system was plagued with ‘expensive energy mix, inefficient power plants, high transmission and distribution losses, circular debt and bad management’.
Failure to provide adequate amounts of gas to the power sector had resulted in huge idle and unutilised gas-based capacity which added to the cost of electricity. And even the gas made available to the sector was not being utilised in the most efficient manner.
“There is a need to control the cost of power generation and distribution through drastic measures to plug the leakages caused through electricity theft, fuel pilferage and non-payment of dues in order to get out of the disastrous mess of circular debt,” Nepra said.
Strict measures with a stringent legal framework and ‘ruthless implementation’ carried out with the support of provincial governments and law-enforcement agencies would be a prerequisite to check electricity theft.
It said the renovation or replacement of obsolete and inefficient units with modern and cost-efficient units was long overdue. Moreover, “pilferage of oil in public sector generation companies needs to be checked and strict control on the logistical network needs to be enforced to ensure that no oil or gas is pilfered on way to the plants of Gencos [generation companies] but also that the quality of fuel meets the required specifications as per the contracts”.
The regulator also advised the government to ensure the right mix of projects based on wind, solar and biomass, and said the proportion of nuclear energy in the mix should be gradually ramped up.
Incentives should be restricted to schemes based on indigenous resources like coal, wind, water and solar, Nepra added.
Published in Dawn, January 2nd, 2015
