No progress in power sector despite rise in electricity tariff to Rs51 per unit: PIAF

ISLAMABAD-The Pakistan Industrial and Traders Associations Front (PIAF) has stressed the need for overhauling the power sector through drastic measures, as there is no progress in this sector’s financial position despite increase in electricity prices up to Rs51 per unit under the IMF’s policy to remove inefficiencies, amidst escalating cost of line losses to a whopping level.
PIAF Chairman Faheem ur Rehman Saigol stated that the circular debt is projected to increase by another Rs545 billion by March 2024 despite a surge in electricity prices as foreign loans pegged with the so-called power sector reforms are limited to only increasing prices and ignore other critical issues. Pakistan eyes another loan of $600 million from the World Bank for power sector reforms in the current fiscal year and the sector also remains in focus of the International Monetary Fund under a new $3 billion standby arrangement. Yet, there is no improvement in the sector’s financial health despite increase in electricity prices up to Rs51 per unit under the IMF’s policy of fiscalisation of power sector inefficiencies, a strategy that has led to a massive change in priorities of the low middle-income groups just to pay their bills.
He said that in present scenario the energy efficiency and conservation are key measures used by countries across the globe to mitigate associated risks. However, in the case of Pakistan, both energy efficiency and conservation were generally treated as alien concepts. He noted that there was an urgent need for upgradation of energy efficiency and conservation standards and strict enforcement, besides replacement of inefficient appliances and consumer awareness for responsible use of energy were other key areas which should be identified for action as a national priority. He estimated that a dollar outflow of around $1.25 billion could be potentially saved annually through implementation of efficiency and conservation measures. He pointed out that the line losses ran as high as 9 percent over and above the percentage allowed by NEPRA. He informed that theft and line losses should be addressed through advanced metering and cabling. Economy has been under adverse external conditions, due to spillovers from the war in Ukraine, and domestic challenges, including from accommodative policies that resulted in uneven growth. Steadfast implementation of corrective policies and reforms remain essential to regain macroeconomic stability, address imbalances and lay foundation for inclusive and sustainable growth.
Efforts to strengthen the viability of the energy sector and reduce unsustainable losses are also essential. Further efforts to reduce poverty and protect the most vulnerable by enhancing targeted transfers are important, especially in the current high inflation environment. He said that Pakistan, being a net importer of energy resources, was facing serious supply-side challenges, as global price of crude oil and imported coal had witnessed a continuous rise, leading to a significant threat to country’s energy security.
Faheem Saigol said that the sector needs to be deregulated in letter and spirit, as nothing can work unless the DISCOs are truly empowered and allowed to act independently. He pointed out that the power sector has been suffering from miss-governance, lack of DISCOs’ competence and missing coordination between the generation and distribution systems. The sector alone can drag the economy down to an abyss unless it is resolved. And for that to happen, nothing short of deregulation and privatization will work, as successive governments have used the energy sector for their political gains by taking decisions that have resulted in unabated rise of circular debt.

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