While the politicians were rejoicing the unanimous resolution passed in the Punjab Assembly a day before, the citizens found little to rejoice as they took out the anger on the streets, protesting against the load shedding which has grown to insane levels, once again.
Naved Qamar refrained from reiterating his promise which he made last month that there would be no load shedding and instead informed that the power tariffs would go up, effective from April 2012. News reports suggest that the revision in lowest determined power tariff has been calculated at Rs.2.9 per unit, but the government is not too keen on passing on the entire increase - and only Rs.1.2 per unit maybe passed to the end consumer - the upcoming fiscal year being an election year.
Should that happen, it would be a telling blow to the already crippling power sector as doling out more subsidy would worsen the inter-corporate circular debt situation. The tariff differential subsidy has historically run way over and above the budgeted amount and it seems this time it would be no different. Providing subsidy of Rs.1.7 per unit would result in nearly Rs.140 billion of subsidy amount - excluding KESC.
The circular debt has shown no signs of receding, even though the government is again mulling over to pull out the same old trick of its hat - that of issuing TFCs to resolve circular debt. It has always proved to be a temporary breather which does not address the key issue.
The current power demand-supply gap has reached an alarmingly high level of 7,000MW - as the hydel generation has receded because of the deal levels in the major dams and insufficient fuel supply to the thermal power plants due to inefficient prioritisation of gas and the liquidity problems which delay the fuel oil purchases.
The situation might improve in the near-term for a very short while as the government is planning to inject some liquidity in the system through OGDCL. The government would do well to do away with power sector subsidy, barring the lifeline consumers, but unfortunately, that is highly unlikely to happen as it would rather go for a short-term fix in the dying days of its tenure and pass on the mess to whoever comes next.
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