Power sector woes

The first part of the trilogy on the power sector woes outlined the existing position of the sector, besides listing the issues as perceived by various stakeholders. The problems being faced by the utilities in conducting their operations, the non-availability of natural gas as fuel, long overdue maintenance and rehabilitation modules of the generating units in the public domain, lack of adequate and enabling policies, the opposition and obstacles put in place by the customers (including the governmental ones), lack of legislative support, pressures and intervention from within and without, the inability to curb inefficiency and corruption in the rank and file, the propensity of non-professionals to dictate the terms, the role of the Government of Pakistan and other issues were duly discussed in the first part of the trilogy. However, in the second part, the realities are being listed in the shape of cogent issues so that they could thereafter be taken up for the finalisation of solution(s). After dilating on the subject and gathering expert opinions, we observed that all the above mentioned negatives have resulted in extremely bad financials for the power sector. This poor financial health inhibits the introduction of new technologies and systems, which could surely be beneficial for both the utilities and their customers. Thus, it is considered as one of the reasons for the continuing feckless performance of this sector. But the first is the present gross negatives in generation, fuel and customer mix. Added to this is the drag of the present load suppression model of tariff formulation. The provisions of cross-tariff subsidies inherently built in the present tariff model are also of extreme importance. As a uniform tariff is implemented in Pakistan, including KESC, it is seen that in spite of providing uniformity at the national level, it actually rewards incompetency, inefficiency and corruption, especially in the loss-making DISCOs viz. MEPCO, HESCO, QESCO and PESCO. As FATA is out of bound for all and sundry, the problems (including huge levels of corruption) in TESCO remain hidden from the public eye. This, according to a wide section of professionals, needs to change. They believe that the basic parameters or assumptions for tariff setting should ensure rates in accordance with the technical parameters and not the existing figures of collection and line losses. As a result, the tariff will be nearly the same for all the DISCOs (5 percent) and the unmet gap in the four less efficient DISCOs will be treated as losses to be underwritten by the owner viz. the Government of Pakistan. This way of tariff setting will simply do away with the present requirement to raise the rates or meet the gap through subsidies. The losses on the other hand, will have to be reduced by due process of target setting. Then the inherent efficiency problems in NTDC and GENCOs tilt the balance against the customer. Thereafter, the issue is the inordinate level of intervention from within and without that the PSCEs have to face in their day to day operations. So much is the intervention that in one DISCO, at one point of time, no officer was posted by the company management on merit and all of them were political appointees. Even the implementation of appropriate solutions to the existing power crises have been under great outside pressure, and thus the delay in mitigation of the crises. It is further seen that the regulatory affairs of the sector are simply out of sync with the ground realities and the requirements of the day. It seems that NEPRA, or the regulator, has become an adversary to the power sector. Instead of regulating the sector, NEPRA is simply trying to protect itself from any possible fallout. Experts consider this extremely disconcerting and an issue that needs immediate correction. According to some, the stumbling block would be the lack of capacity at the regulators end and the equal paucity with the PSCEs (especially the DISCOs). A little insight reveals that the WAPDA officials since early 1990s have stopped thinking about capacity building as a necessity, and thus innovative thought process has never entered into the company management of its progeny viz. the PSCEs. The management of new technologies too seems to have escaped everyones attention. In fact, whenever the need to cut down expenses was felt, the first victim was in-house/on-job training known as the CPD (Continuous Professional Development). The strategic and policy management has thus eluded the concerned. It is thus the issue of stunted capability and capacities. Actually, most of the senior cadre has never been exposed to the required level of expertise. And so, the cadre that is the best in Pakistan (whatever the private sector pundits may say) is extremely weak and would need a lot of professionals to work upon them and then fashion them into what exactly is required. On the other hand, the importation of needed executives is simply a non-starter, especially when the issue of the power sector pertains to technicalities, the introduction/induction and management of technology, attainment of full efficiency of the existing infrastructure, and the management of technical resource. Another issue which merits attention is the mechanics at work to reform the power sector. This job seems to be undertaken at the moment by the MLDAs (IMF, World Bank, ADB, FoDP and such bodies), the Ministry of Water and Power (the weakest of all), the Ministry of Finance and the Planning Commission. Additionally, the Cabinet Committee on Reforms (CCOR) claims to reform the power sector along with the rest of public sector entities. Besides this, various other organisations, including the Finance Ministrys ERU (Economic Reform Unit), are tinkering with the process. However, the situation attains seriousness when seen that the technical resource available with the Planning Commission and the MoF does not possess an understanding into the dynamics in play. On the other hand, the power sector umbrella body viz. PEPCO was dissolved as proclaimed by the Minister of Water and Power on October 1, 2010, and when the CEO of NTDC (one of the 14 PSCEs placed under PEPCO) was asked to look after the duties of the formers MD, actually there was no one left responsible for the reform process at this level. The power sector is thus undergoing change through a large number of different entities with divergent goals. The situation was further complicated by the dissolution/disbanding of the existing PSCEs BODs, and so for four months or so later new boards have been nominated only for the eight DISCOs. Some of the experts contend that the new boards are nearly juvenile and that very few out of the 100 or so members possess the required experience in this sector and that the new boards will need at least a year to understand their jobs. In a situation where the companies face huge gaps in their core competencies, novice BODs would be a drag and nothing else. From the above, it can be concluded that at least the issues are visible and once seen by the concerned authorities can surely be corrected. However, one thing is evident that the present thrust may not be the correct way, as no results are flowing out for the people to see. Experts further opine that the sector is rapidly moving away from a sustainable change and it may become extremely difficult to correct the situation. In other words, the mechanics of badly needed reforms has to be changed for the better. Additionally, all the concerned areas highlighted will need to be worked upon for correction. After completing and concluding the study, appropriate solutions and the way forward would be presented in the third part of the trilogy. n The writer is an Engineer and President of the Institution of Electrical and Electronics Engineers Pakistan.

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