Wapda abstained from launching new thermal projects
LAHORE - Pakistan Electric Power Company (PEPCO) Managing Director Tahir Basharat Cheema has said the energy crisis took an ugly turn mainly because the WAPDA was abstained from launching new thermal power projects while the private sector did not take any initiative for the last many years.
He was talking to the members of Lahore Economic Journalists Association (LEJA) on the prevailing power crisis in the country. MD Pepco said the domestic consumption has increased extraordinarily during the last five years. He said 60 million home appliances have been added in the domestic use, increasing demand by over 2,000MW.
Talking about the financial woes of the PEPCO, he said that all financial issues have been resolved by the government and not a single MW of electricity production has been affected due to any financial constraint.
He said that increase in power generation cost was not properly compensated with the raise in tariff from 2003 to 2006 period. He said government in the meantime failed to provide the promised subsidies as these were not included in the budget. This he added impacted the financial position of power distribution system. He said the tariff increases implemented in September 2007, March 2008 and September 2008 did not cover the increase in cost of production.
He said govt instead facilitated PEPCO (or WAPDA) to obtain bank loans to off ease its financial burden. He said these loans added further burden on the power distribution company in the shape of debt servicing. Cheema said finally the govt realized that the woes of PEPCO need to be addressed prudently. He said the government in 2007-08 budget picked up the loss of Rs65b PEPCO deficit as subsidies to partly cover its Rs126b losses. He said Trade Finance Certificates worth Rs81b where then issue to cover this loss and pay back Rs13b PEPCO liabilities to IPPs.
He said these steps provided only short term relief but was much short of permanent solution. The present regime he added then picked up all the PEPCO loans of Rs216b and budgeted an amount of Rs30b this year to service the debt liability. In addition govt in the current budget allocated Rs10b for payment of electricity supplied to FATA. Another Rs10 billion were provided through the budget to PEPCO to partly recover past FATA dues.
He said the federal government picked up Rs31b dues of KESC that owed PEPCO Rs80b. He said this amount was adjusted by the government against PEPCO loans. He said KESC was instructed to open letter of credit for prompt payment of current supplies. In addition it was asked to make payment of Rs19b in monthly installments of Rs400b. He said govt provided Rs10b subsidy to KESC that was provided to PEPCo. The balance amount will be given by KESC upfront for which a letter has been written to KESC, he added.
He said after improvement in its financials the PEPCO hopes to operate more efficiently. He said against the installed capacity of 17900 MW in PEPCO system the available capacity is only 14400 MW. He said the thermal generation capacity is 8000 MW all of which is being pumped in the system while the hydro-electric capacity is 6440 out of which 4500 is being generated. The shortfall due to Mangla currently is around 900 MW he said adding that hopefully the full power from Mangla would be available by July 25. He said there would be an addition of 3500 MW in the system by December 2009 after which the power situation would normalize provided the nation continue to conserve electricity. He said in next three years over 10,000 MW would be added President LEja Mansoor Ahmad, VP Ittrat Bashir, General Secretary Sudhir Ch and Treasurer Imran Adnan were also present on the occasion.