Pakistan is expected to continue being affected by electricity load shedding until December at least because the existing transmission and distribution network lacks the capacity to carry more than 19,500 MW, against a peak demand of over 23,837 MW registered during August, according to a report in the local media on Friday.
The report revealed that despite having an enough supply of electricity, the transmission and distribution system is not strong enough to carry a load of more than 19,500 MW, resulting in load shedding. He further said that the Power Division has informed Prime Minister Imran Khan and the members of the ECC (Economic Coordination Committee) of the federal cabinet about the systemic constraints.
The new government has set the wheels in motion on the issues facing the power sector and the authorities have asked the National Electric Power Regulatory Authority (NEPRA) officials to attend the next ECC meeting on Monday to give their input on resolving the problems which have created a record circular debt of Rs 1,188 billion.
A Power Division official said that the participants of the ECC meeting held on Wednesday were told that the NEPRA determines consumer tariffs on the basis of assumed 100 percent bill recovery, whereas the recovery of electricity bills stood at 92.69 percent in December 2017.
To finish the circular debt, the Power Division wants the electricity tariff to be determined on the basis of the factual recovery of electricity bills. It has proposed that the government should pay a subsidy to make up the difference between 100 percent bill payment and actual recoveries.
The Power Division official said that the ECC was told that non-payment of power bills in the newly merged tribal districts of Khyber Pakhtunkhwa and Azad Kashmir, as for tube wells in Balochistan, has contributed to the record level of circular debt. Karachi Electric also owes Rs86.26 billion to the power sector.
The ECC has also been informed that the NEPRA decides the tariff on a yearly basis, instead of every quarter. The delay multiplies the fiscal problems of the power sector. Because of the delay in tariff determination, the power sector cannot increase its tariff on time and has borrow to pay for its operations.
The Power Division official said that the National Transmission Dispatch Company (NTDC) has been tasked with upgrading its dilapidated transmission and distribution system by December. By fixing 31 identified systemic constraints, it would increase load capacity up to 22,000MW, although the peak demand in August stood at 23,837MW.
Electricity demand is expected to decrease in the forthcoming winter season, so there would be no more load shedding by December, assuming that the transmission system is upgraded on schedule.
Nonetheless the official cautioned that the more electricity is generated and consumed, the greater the increase in circular debt.