Power reform

April 02, 2019

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A PML-N leader and former minister for power, Awais Leghari, has warned the people to brace themselves for long hours of power blackouts as temperatures go up in the coming weeks. He has accused the PTI administration of incompetence and of doing little to improve power-sector governance that requires plugging transmission and distribution losses, recovering unpaid bills from consumers, as well as preventing widespread electricity theft — particularly by influential commercial and industrial users. While Mr Leghari’s remarks were hardly unexpected given the level of acrimony that exists between the past and present rulers, it is true that all these factors are responsible for the country’s crumbling power sector — but they have been so for decades and the PML-N must also share the blame.

The fact is that successive governments have intentionally avoided fixing the inefficient and corrupt power supply chain because of political expediencies. Although it must be credited for ramping up generation in its five-year tenure as well as the establishment of three efficient RLNG-based power plants, the PML-N rulers also wilfully chose to ignore the constant warnings of experts that building capacity without carrying out power-sector reform would only increase consumer prices and the state’s liabilities in the form of inter-corporate debt. So it should not surprise anyone if the new government, which has been in the throes of a financial crisis since its inception, is unable to use the ‘surplus capacity’, or if a large number of consumers cannot afford electricity, or if the state has accumulated over $11bn in debt it owes to private power producers and fuel suppliers. Nevertheless, the PTI government needs to realise that it does not have the luxury of time on its side. It cannot continue to hide behind the argument that the power crisis isn’t its own creation for very long — and do nothing to fix it. The collapsing power sector will make or break the economy. Unless radical policies are implemented to create an independent, competitive ‘energy market’ in the country, the government will continue to raise electricity prices and borrow more to pay the producers for the system inefficiencies of the sector without any significant increase in generation.

The state-owned oil-based generation plants are least efficient and in dire need of new investments. Since the government does not have cash in hand at the moment it could, among other strategies, consider partnering with private operators to upgrade the plants and to fix the inefficient, decaying power supply infrastructure. Professional management is required to eliminate the losses. Last but not the least, the country needs to move away from inefficient, centralised power distribution from the national grid to smaller, smarter grids. The smarter generation-distribution model will make it easier for the authorities to find partners in the effort to improve governance of state-owned power companies.

Published in Dawn, April 2nd, 2019