Amid increased load shedding and circular debt | Pakistan Today

Amid increased load shedding and circular debt

All we get is tall claims and false promises

“The summer has just begun and there is 12 hours of load shedding in some areaswhich would further intensify to 18 hours. That’s when the government would have real trouble,” said Mian Mehmoodur Rasheed, leader of the opposition in Punjab Assembly, while talking to DNA

This is not first time we are facing a power crisis, the nation is used to living without this basic necessity now, especially in this hot weather. Up to 12 hours of load shedding is considered normal in summer while the hours of power outages vary for various areas.

While official channels have reported up to eight hours of power outage, there are several areas even inside Punjab’s capital that have faced up to 12 hours without basic electrical appliances in this sweltering heat.

The government has long been making promises that load shedding would be tackled but clearly these promises have not been honoured. In fact, the prime minister had claimed that his government would produce extra electricity by 2018 but the situation looks quite the opposite in reality.

“The summer has just begun and there is 12 hours of load shedding in some areaswhich would further intensify to 18 hours. That’s when the government would have real trouble,” said Mian Mehmoodur Rasheed, leader of the opposition in Punjab Assembly, while talking to DNA.

So far, we have only seen the government making tall claims in these four years about overcoming the energy crisis. They only try to fool the people by saying that they would produce extra electricity by 2018. These are mere slogans, they just try to give a lollipop to the people, he said.

Pakistan People’s Party central Punjab secretary general, Nadeem Afzal Chan, said the rural areas are already facing power outage of up to 18 hours.

“The people in government are playing games with the people to earn money for themselves. They made promises that they failed to fulfill. The line losses have also increased to 42 per cent now. As a result, they overbill people to make up for their loss,” Chan said.

The government, on the other hand, is inaugurating power plants left, right and center but it still cannot ensure compliance, payment and hence, production. As a result, these inaugurations become little more than gimmicks.

“The problem is even if they produce enough electricity, the systems do not have the capacity to store it. The entire network needs to be updated otherwise they cannot change the power situation in the country. Demand is also increasing along with production. It has already increased by 4,500 megawatts as more industries are being set up,” said Rasheed, while Chan added that “Unless they strike a balance between the production capacity and demand, the government would not be able to overcome load shedding.”

The problem, if official quarters are to be believed, is that demand far exceeds supply, which is incorrect. As it stands, Pakistan’s production capacity is sufficient. The problem is the circular debt.

According to the Economic Coordination Committee (ECC) of the Cabinet, “The circular debt is the amount of cash shortfall within the Central Power Purchasing Agency (CPPA), which it cannot pay to power supply companies. The overdue amount is a result of: (a) the difference between the actual cost and the tariff determined by National Electric Power Regulatory Authority (NEPRA) which is the Distribution Company’s loss over and collections under that allowed by NEPRA, (b) the delayed or non-payment of subsidies by government, and (c) delayed determination and notification of tariffs.”

The incumbent government, which cleared about Rs480 billion of circular debt after coming into power in 2013, is feared to leave behind almost the same amount for the next government. When it was initially paid off, a lump sum of almost $5 billion was paid.

The nation’s circular debt is now back to almost the same amount. If power generators and producers cannot be paid, they cannot afford to continue production and distribution and the majority of defaulters on payments are large institutions, quite a few of which are federal.

“The government has a poor management which has resulted in the circular debt. There is an ongoing payment cycle between NEPRA, Distribution Companies (DISCOs), WAPDA and other power companies but the government is least concerned about it as it is making money for itself this way,” said Chan.

A Circular Debt Management Plan was also prepared in 2015 to overcome the problem but little did the government concentrate on the plan and implement it practically, courtesy its bad governance. Consequently, the pending payments to Independent Power Producers (IPPs) reached Rs439 billion by mid-February.

Moreover, among the government’s policies to overcome the power crisis is to overcharge the consumers. According to a Financial Times report, Pakistan has some of the highest power prices in the region, at $0.13 per unit of electricity, compared with $0.12 in India, $0.11 in China and $0.09 in Bangladesh. Furnace oil is burnt to produce 40 per cent of the supply, with hydroelectric dams accounting for 30 per cent and gas 25 per cent. Virtually none of the energy comes from coal, which is far cheaper.

The government still claims that it would curb the power crisis by next year and is inaugurating several coal and hydro power projects. Federal Minister for Planning and Development Ahsan Iqbal also claims that a total of 10,000 megawatts electricity would be added to the grid by May 2018, bridging total gap in demand and supply. But what it fails to realise is that the demand would continue to increase with the increase in commercialisation.

Load shedding was among the many challenges the PML-N government was welcomed with in 2013 and it looks like it has not been able to overcome it. In fact, it places the responsibility for this crisis on the previous PPP government.

About the government’s claim of PPP government leaving them with this ‘gift’, Chan said PPP had initiated the 8,000 MW Rental Power Project which was crippled by the present government.

Nonetheless, the power crisis would also be a factor to be cashed in by the opposition for the next general elections.

“Power crisis was the biggest challenge for the PML-N government which they have failed to address. It would also affect their performance in the next elections as they would be accountable for their five-year governance. The opposition would also point out these failures,” said Rasheed.

Chan added, “The government can make some policies to control the load shedding before elections but those policies would only be very timely while the electricity shortage is going to have long term ramifications.”

No one from the government’s side was available for a comment.

The only way to get rid of this crisis is to overcome the circular debt and adopting long term strategies and policies for the problem – instead of short-term tactics. CPEC is termed as a game changer but we ourselves would have to change the ineffective policies for it to turn our fate around.

Mahnoor Sheikh

The writer is a media student. She tweets at @mahnoorsheikh03