Government wakes up from deep slumber

In order to significantly reduce the current electricity shortfall of 7,500mw, the government has decided to immediately add 4,000mw of power to national grid. The Finance Ministry on Monday released Rs 9 billion to Pepco for restoration of fuel supply to plants following directive of Prime Minister Yousuf Raza Gilani after crippling power outages triggered countrywide protests against the government.
An official of Finance Ministry told Business Recorder that it had released Rs 9 billion to Pepco. The Prime Minister, chairing a special committee meeting on energy, constituted by him with the objective of working out a plan in consultation with all stakeholders to overcome the problem of circular debt, directed the Finance Minister, Dr Abdul Hafeez Sheikh, to immediately release dues to Pepco for payment to PSO for fuel supply to thermal power plants.
When contacted, Pepco Managing Director said that Rs 9 billion would be sufficient to meet their liquidity requirements for a couple of weeks. Meanwhile, he noted that some permanent measures have to be put in place to prevent the problem from resurfacing.
Sources said the Planning Commission, the Ministry of Water and Power, and Economic Reforms Unit (ERU) had failed to implement envisaged measures to minimise administrative, distribution and transmission inefficiencies in power sector. As a first step, they said, the proposal was to revamp the boards of distribution companies to improve their efficiency, but the belated and half hearted decisions did not yield any result. It was also agreed that strict action would be taken against power theft; 180 MMcfd gas would be provided to the power sector, and necessary measures would be taken to ensure full recovery of electricity bills.
The Finance Ministry reportedly told the Ministry of Water and Power that the amount of circular debt due to tariff differential would be its responsibility which cannot be attributed to theft and shortfall in recovery of bills. According to an official, the Ministry of Water and Power was told in plain words that circular debt accumulated on account of line losses over and above the permitted losses by Nepra, and that shortfall on account of recovery of bills would not be the liability of the Finance Ministry. The Water and Power Ministry was required to fix the problem in the distribution companies.
According to a statement, the Prime Minister also directed the Ministry of Petroleum and Natural Resources to ensure restoration of fuel supplies to the power plants, including Kapco and Hubco so that they can operate at optimal capacity to ease the electricity shortage in the country. The full restoration of fuel supplies to these two plants will generate additional 4,000 MW electricity that will greatly help in lowering the intensity of the energy shortfall.
The meeting reviewed energy conservation measures, and the Minister for Water and Power was directed by the Prime Minister to hold consultations with the provinces as any operational strategy in this respect has to be undertaken with provincial governments on board.
The Prime Minister also directed the committee consisting of Naveed Qamar, Minister for Water and Power, Dr Asim Hussain, Minister for Petroleum, Deputy Chairman of Planning Commission Dr Nadeemul Haq and Acting Governor State Bank of Pakistan to submit its recommendations in a special Cabinet meeting to be convened soon aimed at the resolution of unscheduled load shedding in the country. The special emergency meeting was attended by Minster for Finance Hafeez Sheikh, Minister for Water and Power Naveed Qamar, Minster for Petroleum Asim Hussain and officials of the Ministries of Finance, Water and Power, Petroleum and Planning Commission. The government decided to convene a special meeting of the Cabinet on energy issues in the next few days.
Another official said that the problem of circular debt and load shedding would not be resolved without the co-operation of the provinces, and the government would have to take the issue to the Council of Common Interests (CCI) after approval of recommendations from the Cabinet meeting.
Sources said that energy committee would finalise proposals in the next couple of day and the special meeting of the Cabinet is expected during the ongoing week. The proposals to minimise the circular debt problem and load shedding are expected to include energy conservation measures and some tariff adjustments. On tariff adjustment side, the proposals of committee include minimal 12 percent increase in power tariff during the current fiscal year and to pass on total electricity tariff approved by Nepra to the consumers. The payment to the power companies was proposed to be linked to their recoveries. The energy conservation measures include two weekly holidays, and shutdown of commercial markets by 8:00 pm.