Consumers using 300 units: ‘withdrawal of subsidy will increase power theft, poverty’

LAHORE: Former Federal Secretary Energy Irfan Ali said on Thursday that withdrawal of subsidy from Power consumers using three hundred units per month would increase power theft and poverty.

He expressed these views while addressing a discussion on ‘Energy Sector Reforms - Increase in Cost of doing Business’, jointly organized by Lahore Chamber of Commerce and Industry and Lahore Economic Journalists Association. Former Managing Director Pakistan Electric Power Company (PEPCO) Tahir Basharat Cheema, President Lahore Chamber of Commerce and Industry (LCCI) Mian Nauman Kabir also shared their views. The session was moderated by LEJA President Muhammad Sudhir Ch.

While sharing his experience as Federal Secretary of Energy Irfan said that one of the major causes of load shedding in Pakistan is line losses and theft of electricity.

Due to this theft, the flow of circular debt increased to more than 35 billion per month, which put pressure on the entire system. He said that in order to reduce the circular debt government launched a nationwide campaign against power theft as a result of which the circular debt after reducing reached Rs 12 billion in two years. The department also successfully, end load shedding on all those feeders where there was no power theft.

He called for increasing the share of hydel and alternative energy sources in the national grid in order to reduce the cost of electricity. Our energy mix consists of 26 percent Hydel, RLNG 26%, gas 8%, nuclear 6%, renewable energy 5%. He further said that appointment of experts with vested and conflict of interests while completely ignoring the criteria in the name of power sector reforms is causing a further increase in the energy cost which resulted in an increase in the cost of doing business.

The concept of Boards in the energy sector was introduced to improve the working of the power sector by formulation of policies which improve the efficiencies and bring down power generation and distribution cost but due to the political appointees and non practitioners increased the cost of the distribution companies (DISCOS), rather reduce the energy cost of the consumers.

Irfan mentioned that International Monetary Fund (IMF) has pressurized the government to abolish subsidies on electricity consumers. He said that the main reason behind the increase in power tariff is rupee devaluation.

Former MD PEPCO Tahir Basharat Cheema suggested that the Power Sector Advisory Committee on the pattern of Economic Advisory Committee (EAC) should be established with a task of policymaking and advise on the sector to the government. He pointed out that there are issues with the contract of Independent Power Plants.

He also said that the installed capacity of the country is 33000 MW. IPPs and private power generation have made electricity so expensive that the industry is out of competition. He said power sector circular debt surges Rs 1.6 trillion out of which the private sector owes Rs 1 billion and the public sector owes Rs 600 billion.

Responding to a question about political appointments in the Boards Cheema said that boards should worked within their limits and should not take or use the powers of the CEOs and executives of the companies.

President LCCI Mian Nauman Kabir advised the government to provide cheap energy and cheap loans to the business community, adding that this is the only way to accelerate the development of the country.

LCCI President further said that businesses and the country could be developed only by providing cheap energy and cheap loans. Expensive energy drains our hard-earned foreign exchange. “We need to focus on our energy mix,” he said, adding that being the premier business support organization of the country, LCCI has always advocated for taking concrete measures to bring reforms in the energy sector.

President LCCI said although Pakistan has enhanced its power generation capacity considerably in recent times, we are still far away from a cost-effective energy mix as a heavy percentage (around 60%) of our energy is still generated from expensive fossil fuel-based thermal sources while the share of cheaper renewable (including Solar, Wind, and Bagasse, etc.) in our energy mix is less than 5 percent.

He said the increased dependence on expensive thermal power generation has over time resulted in tariff hikes, subsidies, circular debt, inefficiencies and also hampered the competitiveness of our Industrial sector, both locally and internationally.

Copyright Business Recorder, 2022