THE sustained growth of a country’s socio-economic landscape hinges upon the provision of fundamental resources including a stable supply of electricity, gas and water. Pakistan has made significant strides in enhancing its generation capacity, achieving a surplus after decades of struggle, with 39,722MW as of 30th June 2021. However, downstream lacunas also need to be addressed to encourage the consumption of this electricity. Failure to do so is currently estimated to contribute up to Rs35 billion towards the circular debt every month.

The National Electric Power Regulatory Authority’s (Nepra) State of Industry Report 2020-21 provided a stark reminder of the state of the power sector in the area of new connections. Among several key areas for improvement noted, the regulator stressed that distribution companies (Discos) need to prioritise the installation of new connections within their service territory.

Data compiled from across Pakistan shows that as of 2021, over 500,000 new connection requests had not been completed. About 75 per cent of these requests are pending with only three of the 11 Discos; Multan Electric Power Company Limited (Mepco) leads the ranks with 218,018 pending applications, followed by the Lahore Electric Supply Company (Lesco) with 107,866 and Faisalabad Electric Supply Company (Fesco) with 54,278.

Reports also indicate that approximately 50 million Pakistanis — almost 22pc of the country’s population — are deprived of access to this basic necessity. Even if Pakistan develops the capacity to energise half a million connections in a year, it would take us 100 years to extend the supply of electricity to just 22pc of its citizens.

Assuming that the 500,000 pending requests are residential in nature, Rs20.8bn can be generated in revenue annually

In a policy paper dated 2018, the World Bank estimated that “a lack of connectivity and poor reliability may be costing the country at least $4.5bn (1.7pc of GDP per year)”.

The scale of the problem

Power suppliers and particularly distribution companies across the world are businesses which generate revenue against the electricity they can sell. Technology to store generated electricity on a large scale is still nascent and evolving, which means that any electron unused is an electron wasted.

We can use some basic mathematics to understand the magnitude of the challenge facing us. As an example, we take all 500,000 pending connections as residential in nature. Each house has 3 LED bulbs of 10 Watts (W) each, 3 ceiling fans of 80W each, a conventional refrigerator at 180W, an iron using 1000W, and a water motor using 750W.

With these appliances, the total connected load of the premises is 2.2 kilowatts as per the website of the National Energy Efficiency and Conservation Authority (Neeca). Scaling up, this puts the total demand for electricity at 1,104,067 kilowatts or 1,104 megawatts. This is greater than the capacity of Mangla Dam — considered among the nation’s flagship hydel power projects with an installed capacity of 1000MW.

The above example was only to establish the scale of the latent demand, not to prove that it outstrips supply. Barring the recurring supply chain issues in the availability of fuel, we do have excess capacity installed. Achieving stability in this key area will also enable us to maximise national output, making reliable electricity supply available to a growing number of consumers.

Economic impact

Next, we extend our math and look at the consumption of these 500,000 connections. A refrigerator will operate for 24 hours a day, while we can estimate that fans and lights may be used for 12 hours a day. The iron and water motor is used for one hour every day.

In this scenario, Neeca’s information shows that each household is using 279.30 kilowatt-hours (or units) in one month, which translates to Rs3,481.33 per month including the applicable 17pc government sales tax. In one year, each connection is using electricity worth Rs41,775.96.

This translates to Rs20.8bn in annual revenue generation for the country for the 500,000 pending connections. Again, this is assuming that the entire demand is being driven from the residential sector, whereas the reality is that Pakistan’s commercial, industrial and agricultural activity is also growing.

Nepra’s State of Industry Report 2021 demonstrates that the total sales of electricity in the country stood at 8.15pc in 2020-2021, almost half a percentage point above the previous year. Notwithstanding the impact of seasonal changes in electricity consumption, we can agree that with the consistent addition of new consumers into the mix, the baseline revenue to be generated can increase manifold, and the federal government should be addressing this on priority.

The bottlenecks

With a theoretical excess supply of electricity in the country, perhaps the greatest roadblock to acquiring a new connection is in the application process itself.

A cumbersome series of steps need to be taken by the consumer in gathering the required documents and seeking internal approvals under a system that is dominantly manual in nature. An online system does exist to help customers track their application status, but the utility of this system remains in question if half a million applications remain unserved.

Peculiarly, until one month ago, consumers in Islamabad were banned from applying for new connections, which was lifted after efforts made by former federal minister Asad Umar.

Nepra recently allowed Discos to approve net metering applications with load requirements up to 25 kilowatts, a simple amendment which will encourage more applications and reduce turnaround times. These obstacles are also suppressing demand while simultaneously depriving millions more of their access to power. Similar interventions could be possible in the overall new connection process as well.

Special oversight must be brought into the leading Discos — Mepco, Fesco, and Lesco — which make up 75pc of the current outstanding connection request volume.

The power sector continues to remain the Achilles’ heel for our country’s economy. With approximately Rs35bn added every month to the circular debt, this sector has many issues that must be resolved on a war-footing basis to fix this leaking bucket.

The author is the President of the Council of Economic & Energy Journalists

Published in Dawn, The Business and Finance Weekly, May 23rd, 2022