SHAMSA SAJJAD

The Auditor General of Pakistan submitted a report to the President of Pakistan regarding irregularities in the accounts of Water and Power Development Authority (WAPDA) and PEPCO for the year 2012-2013 and previous audit years. The report highlighted the scale of the mismanagement that lies behind the country’s power crisis. The report was submitted to the president on 26th of March 2014.

The report says that multiple irregularities, embezzlement, and misappropriation of Rs 98b have been found in the accounts of the power sector. There was poor monitoring of revenue collection, embezzlement of reserves, misuse of public funds, non-implementation of commercial procedure and non-adherence to provisions of power policy and many other failures in power sector in the financial year 2012-13.

The AGP said that the reappearance of continual irregularities “cast a shadow of doubt on the effectiveness of the internal control system.” He further said that the internal controls were bit by bit degenerating as there had been an increase in cases of unauthorized extension of load, non-implementation of equipment removal orders, theft of material and electricity and contravention of procurement rules as well as the Nepra Act.

The audit divulged that FY 2012-13 power distribution companies could not collect Rs 401 billion from various defaulters- while the procurement of material and consultancy services, provision of PC 1s contracts included the defying of procurement rules.

Positive step by PML-N

Pakistan has been facing agonizing want of energy for quite a number of years. Some attempts have been made to resolve the crisis. The previous government led by former president Asif Zardari took some initiatives to lessen the supply-demand gap through implementing consumer friendly energy policies. But the corrupt practices in the energy sector surged the gap in supply and demand of the total output supplied via distribution companies (DISCOs) and NTDC.

Subsequently, when the government of Prime Minister Nawaz Sharif took over in June 2013, the energy shortage was already at threatening levels with overall supply deficit reaching 6000 MW to 7000 MW in 2013, resulting in improper load management, unpredictable loadshedding, burden on fiscal resources etc. Moreover the national transmission system was highly risky and there were challenges for new investment in the power sector. The present government has taken major generation optimization plan resulting in improvement of performance of GENCOs on one hand and improving IPP plants availability during summer on the other which decreased domestic loadshedding from 8-11 hours to 6-8 hours while industrial loadshedding was brought down from 8-12 hours to zero since November 2014 except during January and Ramadan. Similarly effective measures have been taken to remove transmission and distribution constraints which enabled power sector to utilize 90 percent of its available generation capacity.

These measures have enabled the power sector to pay better and as a result PSO has received 101 percent of its outstanding dues during 2014-15 as compared to 77 percent during 2013-14, IPPs received 102 percent in 2014-15 as compared to 85 percent during 2013-14 and gas companies 106 percent in 2014-15 as compared to 104 percent in 2013-14.

The lower burden on national exchequer has improved the power sector a lot. In 2012-13, Rs334 billion was the power sector subsidy provided by the government. Due to better fiscal management in 2013-14 the subsidy was brought down to 292 billion rupees. It further came down to 221 billion in 2014-15, which is 0.75 percent of GDP. The ministry is making more efforts to bring down the subsidy.

New policies have been made due to investment facilitation and investors have greater access to the potential power projects. As a result, around 15000MW of power sector projects are now on fast track and in different stages of completion.

Furthermore, PM Nawaz Sharif and his entire team took far reaching steps to resolve energy crisis; six coal based projects in Punjab and Sindh were proposed and initiated during late 2013 and early 2014 that were meant to increase power generation capacity. Nevertheless, the experts considered them environmentally hazardous because of use of coal as the primary resource.

China is the highest consumer of coal based power plants in the world but the overall environmental impact has been negative because of higher air pollution in the industrial areas and the surrounding suburbs. This was the reason for Pakistan to review the coal based energy projects, replacing them with Liquefied Natural Gas (LNG) based plants for power generation by February 2015. A lucrative $ 21b deal for LNG projects with the Government of Qatar was also finalized by March 2015. This has been a positive step taken by PML-N led government because it can reduce the costs by 40 percent and emit 45 percent less carbon dioxide as compared to coal. This is the cleaner and more effective energy source.

The focus of Nawaz Sharifs government is going in the right direction for increasing power generation and it is highly appreciable and it is hoped that the government will fulfil promises of providing relief to the people.