lahore -

The next government will have to face the wrath of the masses if they don’t resolve power crises on priority basis, and for that, among other immediate actions, they will need to work on the financial issues of power producers.

According to energy experts, performance of Discos and Gencos grossly deteriorated in last five years and the steps recommended by donors and lenders were never implemented with sincerity and commitment. The severity of the situation can be gauged by the amount of Rs453.95 billion Pepco has to pay to gas companies, oil companies, IPPs, Discos, and others. According to the breakup of this payables as on January 11, 2013, Pepco owes Rs36,26m to Gencos on gas and Rs15.34b to Gencos on oil. Despite the fact that they are saving billions of rupees of the government through their efficient plants, the IPPs are suffering the most due to this payment crises on the part of the government, IPPs representatives claimed.

They said that this is the reason Rs 57.48 billion is the total current outstanding bill still to be paid to eight IPPs namely Atlas, NPL, Halmore, Saphire, Liberty, Orient, Saif, and NCPL by the government, while the outstanding balance of arrears is Rs 66 billion. It is evident that with such a huge amount in terms of credit these eight IPPs are unable to produce more than 1600MWs, thus making the masses suffer. Therefore, the government should pay attention to this issue.

They said that shortage of power supplies will increase in coming weeks due to increase in demand at domestic and commercial levels, but, sadly, Ministry of Water and Power and Wapda has failed to generate enough electricity through thermal resources in past five years and left the whole nation in the lurch.

One the first thing the next government should do is to take concrete measures on technical and financial grounds for the relief of both the industry and masses. The first step in this regard would be clearance of dues to Independent Power Producers (IPPs) in order to have power supply from them to reduce load-shedding.

This will bode well because the past government did not pay huge piled up dues to IPPs and also showed complete disregard to sovereign guarantee it had given to the projects.

It will be quite prudent for the next government to provide gas supplies to those power producers having efficiency to generate maximum electricity, which is in fact, a simpler formula to produce optimal power against supplies of limited gas.

Also, fuel supplies should be ensured based on merit order to generate cheaper energy at maximum level because getting electricity from IPPs is way much cheaper than having it from Gencos. This is evident from this example: the unit fuel cost of IPPs under 2002 policy on furnace-based power plants stood at Rs 14.095 against the fuel cost of Rs 21.04 of GENCO, which could have led to saving of Rs 6.94 on per unit if the economic order was followed. This saving on gas-based plants was Rs 2.36 per unit.

But, the previous governments never paid heed on using this option and at the same time did not use these IPPs at their full capacity and made Gencos run at full capacity, thus inflicting a huge loss on account of efficiency and eating up more fuel to generate as much power as IPPs would have made in less fuel.

The next step for the coming government will be to ensure maximum recovery of charges against the billings to the customer to prevent energy sector from further financial losses. The non-payment of dues can be contained easily through tightening the recovery system.

These two steps will help the government to reduce the load-shedding hours by 30 to 35 percent in the short-period. Later on, the new government should focus on evolving a comprehensive strategy to overcome power crisis, which is key to economic growth of the country.

Recently a report released by planning commission states the way the power sector was governed in the last five years. It explained the bad governance in the power sector entities, saying that all the power sector entities need to be run under corporate culture and then they should be sold out ensuring zero interference of the government.