THE deepening energy crisis and corruption in power companies would be a major cause for suffering voters not to forgive Pakistan People’s Party in the coming elections, according to senior ruling party parliamentarians.
The management of the energy crisis has been a thorough failure. Pakistan’s power sector has remained on top of corruption index in audit objections raised by the Auditor General of Pakistan for over past two decades. The power shortages are causing 3-4 per cent loss to economic growth rate every year.
On top of that, power sector’s inefficiencies and system losses have eaten up over Rs1.2 trillion in four years from the federal budget, according to the ministry of finance. And yet its circular debt, currently in excess of Rs500 billion, has held virtually hostage and technically taken to a near-default stage almost the entire energy sector – from oil marketing firms to refineries and from gas utilities/ producers to private power companies.
The inefficiencies, corruption and system losses were so entrenched in the system that a top power sector official claimed recently that even 42,000 military troops led by two generals and 13 brigadiers failed to improve the power sector 10 years ago.
The ailment has reached to a stage that nobody even bothers now to debate how much this was adding to the cost of doing business and industrial production. Even though rising electricity rates and widespread load shedding hardly need any explanation, the government has officially conceded an abnormally dismal performance of the water and power ministry.
Despite exceeding spending target by almost 25 per cent, the ministry of water and power has itself confirmed that none of the service delivery targets assigned to it under the federal budget could be accomplished during 2010-11. Over and above these public investments, the ministry of finance separately provided a subsidy of Rs346 billion in 2010-11 to help keep the electricity tariffs on the lower side but the power rates kept on moving upwards.
In its performance report released as part of the federal budget 2012-13,the water and power ministry has reported zero achievement on five of major performance indicators by output or service delivery. Its primary objective of providing “cheap electricity and irrigation water for socio-economic uplift” when seen in the context of the outcome, comes out to be a complete failure.
In 2010-11 alone, the power sector was required to start 17 small dams, complete six small dams, start two large dams and increase water storage capacity by 3.2 million acre feet but eventually reported no progress.
While the government has miserably failed even to stop or slow down the all-round crisis, the innovative minds within the government and power sector have found new avenues to make money as power load shedding affected consumer from children to patients and from schools to industries and trade.
For example, parliamentarians recently brought on the record of National Assembly their direct exposure to widespread graft allegations in management of load shedding. Many MNAs belonging to all parties including the ruling PPP, MQM and PML-N complained that officials of distribution companies were taking bribes from consumers to exempt one area from loadshedding at the cost of increased load shedding in adjacent areas.
Water and power minister Choudhry Ahmad Mukhtar confirmed that Punjab faced discrimination to some extent in recent injudicious distribution of ‘power shortfalls’ that led to violence in many cities.
Some within the government attribute the build up of circular debt to mismanagement of power situation in Sindh, owing to non-payment of electricity and gas bills. Electricity bills outstanding against Sindh amounted to about Rs52 billion while combined receivables against the KESCO on account of gas bills and tariff subsidy stood at Rs42 billion. Efforts to recover outstanding dues have met with failure.
But according to minister Ahmed Mukhtar, the government could not touch Karachi or Sindh when Punjab was on a political war path. “KESCO is a political issue. We cannot afford to ignite another front when there is fire on one side”.
It would be instructive to note that the total recovery against billing stood at 97 per cent in Punjab (96 per cent in Lahore, 98.5 per cent each in Gujranwala and Faisalabad, 96 per cent in Islamabad, Rawalpindi and AJK and 97.2 per cent in Multan), the overall recovery in KP stood at 82 per cent, 69 per cent in Hyderabad Electric Supply area, 51 per cent in Sukkur and 36 per cent in Balochistan) until August 7, 2012.
As the Pakistan State Oil started to default on foreign payments and releases from finance ministry reduced to meet only immediate payments, the government decided to start ordering fresh furnace oil imports on 120 days’ delayed payments instead of existing 60-90 days without caring for consumers who have to cough up about 55 paisa per unit higher power tariff to meet additional cost of bank charges and guarantees.
But then those at the Planning Commission and petroleum ministry raised questions over sub-optimum utilisation of furnace, raising suspicions over fuel black marketing. It was then that a cabinet committee on energy directed for monitoring of fuel consumption at the power plants for efficient inventory management.
At the same time, the petroleum minister and secretary have warned the president about a looming crisis because circular debt had chocked the oil supplies owing to its receivables of Rs243 billion. The credit limit was exhausted, forcing banks not to extend more financing.
As if that was not enough, the senate standing committee on water and power suspected that induction of over 19,000 employees in the power companies over the last four years was made on political grounds without following merit and rules and ordered immediate termination of 28 senior contractual employees.
Senators have put on record their criticism over the system of constitution of board of directors of power companies for not following merit order or qualification principles and inducting blue-eyed persons. Such directors instead of contributing towards improvement in the system were allegedly engaged in serving their own interests.
But the most worrying aspect was a disclosure by the power sector officials that its transmission system was going to collapse completely in four years owing to negligible investments. They stated that with overburdened feeders and transformers and the pace of investment at hand, the power system could not “improve in the next 15 years and instead would collapse in four years”.