ISLAMABAD - Federal Minister for Power Division Awais Laghari has said that the tax machinery of Federal Board of Revenue has failed to collect revenue from other sectors, therefore, the entire burden has been transferred to power sector and now Rs8 per unit is being charged on account of various taxes in electricity bills.
The Minister made these revelations while briefing the Senate Standing Committee on Power that met under the chairmanship of the Senator Mohsin Aziz here.
The Secretary (Power Division) briefed the committee on the overall governance structure of the Power Division and its administrative machinery. The committee members were of the view that the briefing should address the real issues facing the power sector. The Chairman emphasized the need for a holistic approach to the power sector.
The Chairman of the committee questioned the installation of imported coal power plant in Sahiwal, noting the impracticality of such projects operationally and environmentally. The Secretary Power Division explained that projects are installed based on load centres.
The chairman of the committee said that the electricity price has made life difficult for the poor man. He said that industries are shutting down due to expensive electricity. The middle class is also suffering from expensive electricity, he added.
The chairman of the committee asked that why a power plant on imported coal was installed in Sahiwal?
The Minister replied that when Sahiwal Coal Power plant was installed, local coal from Thar was not available. Similarly, when Sahiwal coal power was installed, the capacity payment was not high, he added.
Senator Shibli Faraz commented that Sahiwal Coal Power Plant was not installed in 1947. It was the lack of planning that a plant on imported coal was installed in Sahiwal and now coal is being transported from Karachi to Sahiwal by train to operate it.
Lack of planning in power sector has burdened the common man. The government should not set up a power plant on someone’s wish. Senator Shibli Faraz said that we are accountable to the people.
When there is a flaw in our planning, the investor will take advantage of it, he added.
He asked the Power Division to handle previous power projects before signing new agreements.
Laghari said that everything in the power sector is linked to the dollar. The devaluation of Pakistani rupee pushed up capacity payments.
The capacity payments of Sahiwal Coal Power Plant gone up from the initial Rs 3.5 per unit to Rs 12.5 per unit, he revealed.
The Secretary Power said that Sahiwal plant will be shifted from imported coal to local coal. He said that the shifting to indigenous coal will be in phased manner and it will take four-and-a-half years to complete the process.
Awais Laghari said that switching to indigenous coal will save Rs 200 billion rupees annually.
“I have concerns regarding the situation of the power sector,” Shibli Faraz said.
The chairman of the committee said that the cost of Pakistan’s electricity generation is highest in the entire region.
“We have wind, water, sun, but still our electricity is expensive,” Chairman committee said and questioned why it is so?
The minister for power division said that the tax machinery of Federal Board of Revenue has failed to generate revenue from other sources/sectors, therefore the entire burden is on the power sector and the consumer pays a tax of Rs 8 per unit.
It is worth to note that Secretary Power had told a National Assembly panel that the government is collection Rs 860 billion annually by levying seven different types of taxes.
The Power Minister said that there are problems in bringing cheap electricity to load centers due to transmission constraints.
Due to transmission constraints the expensive electricity has to be used instead of cheap electricity, he added.
Senator Shibli Faraz questioned the non-appointment of the MD National Transmission & Despatch Company to which the Minister assured that the MD would be appointed within one month. The Minister acknowledged structural issues within NTDC. The role of NTDC in the power sector has been very weak, the minister said and added that the government is working on the overall restructuring of the power sector.
The Secretary Power provided a comprehensive overview of installed vs. operational capacity, adding that capacity discounted for permissible and forced outages amounted to 32,576 MW, capacity discounted for seasonal and daily variation amounted to 28,736 MW, and effective operational capacity amounted to 22,879 MW.
Additionally, the Ministry presented a detailed summary of completed development projects in the NTDC network from 2012 to date, along with a briefing on power generation projects, alternative renewable energy projects, and transmission line projects under the China-Pakistan Economic Corridor (CPEC).
Furthermore, details of implementation agreements (IAs) signed by PPIB with commissioned IPPs were also shared with the committee members.
In the end, the Minister of Power requested that the committee formulate specific questions to be sent to the Ministry for specific replies. The committee agreed to have detailed discussions on circular debt, line losses, electricity theft, structural issues of the power sector, and the detailed terms and conditions of IPP agreements with track changes. The committee members also agreed to invite CEOs of three DISCOs on a rotational basis for briefings.
The Minister assured that copies of the agreements with IPPs would be provided to the committee for their perusal.