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Speaking on the occasion of signing of dollar 3 billion loan by World Bank to develop energy infrastructure and to support energy efficiency and conservation programmes, federal minister for power Khurram Dastgir is reported to have stated: “The funding is proof of the government’s goal of ensuring sustainability in the energy sector, which may be a welcome change from several years of imbalanced and poorly planned expansion”.

He said the global lender acknowledges the difficult decisions the government has had to take vis-a-vis the energy sector, referring to the massive increase in power tariff due to high oil prices and a weakening rupee.

The incumbent government and the governments before have been hiding behind narratives to justify increases in power tariffs by blaming high oil prices, a weakening rupee, withdrawal of subsidies by IMF (International Monetary Fund) to power sector and more of similar tangents while, simultaneously, ignoring and side-tracking the real issue: the energy sector, particularly the power sector, of the country is still in terrible mess. What is presented to public is a flawed narrative if not misleading one.

The Senate Standing Committee on Power spilled the beans and blatantly exposed the governance style of the power sector with inside information as to what is going on in this sector.

Displeased over the continued absence of the federal power minister from its meetings, the Senate Standing Committee on Power this week once again deferred a key government bill and expressed concern over rising circular debt and ‘out-of-merit’ selection of directors on the boards of power sector entities.

The committee decided to consider the bill only in the presence of federal minister for power, who has continuously been absent from the committee meetings for the last seven months.

During a review of the list of boards of directors of various entities under the Power Division, the chairman of the committee observed that the members of the boards had been appointed without merit. “It seems like the CVs of the board members have been drafted by one person,” remarked a senator.

The committee resented ‘irrelevant’ inductions into the Power Division, arguing that if such people are included, grid stations will be destroyed and pointed out that two members of the Multan Electric Power Company were irrelevant to the field at all. He said it was no surprise that circular debt was rising when boards of distribution companies were represented by currency dealers and real estate operators.

The committee members were informed that the circular debt in power sector in the country now stood at Rs 2.4 trillion. The committee noted that due to the non-operation of two power plants, the treasury suffered a loss of Rs 42 billion.

The state of affairs in the public gas sector is bad but it is the more than worse in power sector. Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL) have demanded up to 237 per cent increase in natural gas rates to generate about Rs 660 billion in additional funds during the current fiscal year. This steep level of tariff increase will further hurt the businesses, industry and exports.

The $ 3 billion loan agreement signed this week with World Bank expands on the bank’s existing dollar 13 billion-plus loan portfolio to Pakistan, which is heavily skewed towards the energy sector.

It is, however, important to note that over the years, the energy sector of the country is sinking from one low to another. It is, therefore, increasingly clear that the World Bank loans have not worked out in public interest. This scenario adds strength to the senate’s observations that the poor governance of the power sector is primarily responsible for the mounting circular debt and whatever is wrong in the beleaguered power sector of the country.

The economists of the country have termed the power sector a prime threat to country’s economy. Its poor performance has crippled country’s businesses, industry and exports and has made electricity unaffordable to the public at large.

The frustration of the Senate Standing Committee on power and the insensitivity of the Minister for Power not to present himself for a benign accountability by the Senate Committee spells out loud and clear the fact that the focus of the government is not to embark on the difficult path of resolution of issues but is to maintain status quo. Perhaps this mindset is there to stay as things stand today.

Copyright Business Recorder, 2022

Farhat Ali

The writer is a former President, Overseas Investors Chamber of Commerce and Industry


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