Piling receivables: PM shown dismal picture of power sector

[ziaulislam]

Piling receivables: PM shown dismal picture of power sector
By Zafar BhuttaPublished: November 2, 2014
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Ministry bills are paid by the Capital Development Authority, which has a nominal budget provision for the purpose. STOCK IMAGE
ISLAMABAD:
The performance of the power sector under the current government has been very poor and gloomy as the sector has been facing a sharp decline in the recovery of power bills and an increase in theft and receivables.
This dismal state of affairs of the power sector was presented to Prime Minister Nawaz Sharif during a briefing on the electricity situation at a cabinet meeting on September 26. The minutes of the meeting are available with The Express Tribune

.

Official sources informed that the prime minister, who chaired the meeting, was told that though the losses over the past one year had remained the same, June 2014 had shown significantly higher losses compared to the same month previous year.
It was further informed that average collection rate of power bills across all the power distribution companies (Discos) had dropped to 80% in 2013-14 from 90% in the previous year.
“This decrease is driven by the drop in collection at TESTO, IESCO and GEPCO. The receivables have increased by Rs100 billion,” the PM was told. According to the document, receivables were Rs384 billion last year whereas they are Rs485 billion this year.
Regarding the decrease in collection by IESCO, it was explained that the collection from Azad Jammu and Kashmir (AJK) and ministries of the federal government was significantly low.

Ministry bills are paid by the Capital Development Authority (CDA), which has a nominal budget provision for the purpose. It was proposed that the ministries should pay their electricity dues from their own allocated budgets.
Finance minister said that the increase in billing had not occurred as a result of slab adjustment. “If the losses could be reduced, the price of per unit electricity would not have increased,” he said, admitting that massive overbilling had taken place. He noted that the receivables should have been recovered.

Interior Minister Chaudhry Nisar Ali stated that the issue of overbilling needed to be resolved. “Action must be taken since people are not satisfied with the performance of power distribution companies,” he was quoted as saying.
The minister stressed the need for the appointment of special prosecutors to address the issue of corrupt officers in government departments, especially in the power sector.

Special Assistant to the Prime Minister Dr Musadik Malik said that apart from more than 100 interviews, data of 15 million domestic consumers was analysed to identify the cause of consumer protests against electricity bills and develop a strategy to change public sentiment.
He said databases of all Discos had been scrutinised and the billing of all the customers at every Disco from July 2013 to July 2014 was being examined. He pointed out that the government had increased power tariffs by 33% per unit, which raised the average bill by 42% over the past one year.
Published in The Express Tribune, November 2nd, 2014.

so basically PML N performance in power sector has been worse than PPPP. I wonder if PML N is going to blame PTI sit in for this too

we are talking of 500 billion rupees, now receivable means that govt knows who are culprits, its not line losses but receivable!!. this alone is enough to finance one whole dam

 

[SBD-3]

Yep they know where are the defaulters
KPK 55-59% default
Punjab ~5%-10% default
Sindh ~40% default
Balochistan >50% default.

 

[koolio]

Yep they know where are the defaulters
KPK 55-59% default
Punjab ~5%-10% default
Sindh ~40% default
Balochistan >50% default.

Buddy who is in charge of power sector the WAPDA which comes under federal government, its the federal governments responsibility to collect all the utillity bills owed by the consumers.

 

[SBD-3]

Buddy who is in charge of power sector the WAPDA which comes under federal government, its the federal governments responsibility to collect all the utillity bills owed by the consumers.

Ever wonder why KPK govt never took control of PESCO....rather they play politics on non-recovery....

 

[ajpirzada]

Ever wonder why KPK govt never took control of PESCO....rather they play politics on non-recovery....

KPK govt asked for the full control of PESCO including the energy generation whereas the govt was only interested in handing over the control of bill collection. So tell the federal govt to please hand over the full control of the PESCO to the KPK govt so we can start making them accountable for it. Untill then its only the federal govt which must face the criticism.

Apparently a proposal in this regard is already lying with the federal govt. Hoping that they start dealing with the governance structure of the electricity generation & distribution mechanism rather than simply focusing on initiating projects one after the other.

 

[ziaulislam]

people forget the PML N is second biggest part at KPK, and people have been disappointed by the behavior of fedral govt, it seems PML N will lose it votes in KPK

 

[ziaulislam]

regarding current govt we have two things,
1. facts
2. sentiments

on facts govt has performed poorer than PPPP in some departments like electricity, primary care and health and overall only modestly better due to its very much liberal econmic policy (including allowing blAack money to be cleaned without asking the source)

on sentiments we all were hoping for some saviour, so we are still in denial phase that PMLN will not deliver..over next 4 years expect other phases like anger, depression, bargaining and finally acceptance

so allowing rich people to make money over there black money resulted some econmical growth!

 

[SBD-3]

KPK govt asked for the full control of PESCO including the energy generation whereas the govt was only interested in handing over the control of bill collection.

PESCO is an energy distribution company and does not generate electricity on its own. That is done by PEPCO which not only generates the electricity but also purchases it from IPPs/RPPs. NTDC transmits the generated electricity to DESCOs (which include PESCO as well). So KPK govt was asking about federal government handing them over the generation capacity as well because this way they could just keep non-collection in tact and don't have to bear the burnt of it. However, they never offered government to purchase that generation setup because they knew that such amount will not be possible to arrange. So they cleverly backed off by using generation hand over as excuse.
It should be kept in mind that the provincial government have been allowed to directly control those generation units which have either been set up by the provincial government or with the help of provincial govt. But KPK government is asking for handing over the federal projects upon which they are already entitled to hydro profit and royalty. KPK government could install generation capacity for PESCO after taking it over (Just like how K-Electric has its own production setup) but again that would take money and time but collection is really the issue behind backing off since commercial collection rate in PESCO is around 55%, Federal collection rate is around 86% whereas the provincial government collection rate stands at mere 40%.

 

[SBD-3]

people forget the PML N is second biggest part at KPK, and people have been disappointed by the behavior of fedral govt, it seems PML N will lose it votes in KPK

PML-N's vote bank has always been in Hazara belt. PML-N has rarely seen any MP selected from Pushtoon dominated areas which are the king makers in KPK assembly.
So in Pushtoon dominated areas it will be PTI Vs ANP Vs JI Vs JUI-F and given the mum performance of KPK government and ANP's increasing political activism we may see interesting times ahead. PML-N may face competition from PTI but they have pretty solid vote bank.

 

[Bilal.]

Privatise discos... The only way to fix the problem I think.

 

[ajpirzada]

PESCO is an energy distribution company and does not generate electricity on its own. That is done by PEPCO which not only generates the electricity but also purchases it from IPPs/RPPs. NTDC transmits the generated electricity to DESCOs (which include PESCO as well). So KPK govt was asking about federal government handing them over the generation capacity as well because this way they could just keep non-collection in tact and don't have to bear the burnt of it. However, they never offered government to purchase that generation setup because they knew that such amount will not be possible to arrange. So they cleverly backed off by using generation hand over as excuse.
It should be kept in mind that the provincial government have been allowed to directly control those generation units which have either been set up by the provincial government or with the help of provincial govt. But KPK government is asking for handing over the federal projects upon which they are already entitled to hydro profit and royalty. KPK government could install generation capacity for PESCO after taking it over (Just like how K-Electric has its own production setup) but again that would take money and time but collection is really the issue behind backing off since commercial collection rate in PESCO is around 55%, Federal collection rate is around 86% whereas the provincial government collection rate stands at mere 40%.

Thanks for the correction of PESCO and PEPCO. Yes, KPK govt asked for the transfer of the PEPCO rather than just PESCO alone. I do not see what is wrong with this. It is not a private transaction but management of state resources for the benefit of the people. All the devolution of resources undertaken under the 18th amendment was not selling of resources (such as education & health infrastructure etc) but a transfer from the federation to the provinces. The reason being that the State (or State units) is not tasked with earning profits but only managing the resources of the country towards providing efficient (public) service delivery. Why then should it be different for power sector resources?

I do see your point of the selling of resources and its a valid point if seen from the perspective of market economy. But i personally do not see why federation should be controlling provincial resources. You may argue that this is because the infrastructure developed in such provinces was from the Federal investment. But then that Federal investment is coming from the very people of the provinces via the taxes collected by the Federation and/or loans (which is nothing but taxation in the future). For the sake of further argument, lets say that i take ur argument to the KPK govt or any provincial govt of small provinces. What response would you expect from them? Do you not expect them to respond by saying that federation has been depriving them of their own resources since decades? The royalty argument is very outdated since federation has always been lagging way behind in paying the deserved royalty to the provinces. Moreover, the rate (per unit price) at which the royalty is paid is what was agreed way back in time. In all fairness, the resources of any of the small provinces have never made it to their home province while the rate at which they receive the compensation is only shameful.

KPK and for the matter any province has every right to demand that the federation transfer these resources back to them under some profit/loss sharing formula which can be mutually worked out between the province and the federation. The idea of Federation selling these resources back to the respective provinces is politically impossible and rightly so.