Are we headed towards yet another and more painful bout with blistering heat as temperatures soar and daily periods without electric power increase? At least that is what appears to be the case. Figures, released last week, prepared by Pakistan Electric Power Company (PEPCO), put the difference between generation and demand of electricity at a record 6,000 MWone third of 18,000 MW, the total demand. That means miserable eight hours of loadshedding if the consumption of electricity is uniform, belying governments claims of a less harsher summer. Far from that, the situation may even get worse, as the demand for electricity is likely to touch 19,500MW, promising a long hot summer. Why did the government once again fail to bring about a cut in loadshedding? Having added over 3,000 MW to the national grid, the government was confident of bringing relief, but that didnt happen. Failure to arrange fuel for thermal power plants and reduction of over 2,000 MW in generation of government-run thermal power plants is the main reason. Here are the facts: Thermal power plants, which have an installed capacity of over 15000MW, mostly use oil, gas and coal as fuel, Out of this 660 MW is generated using nuclear energy. Besides, 6,500MW of electricity is produced through Hydel generation. As dependence on oil as fuel for thermal plants increased, so has the cost of production of electricity. At present, the average cost of electricity is estimated at Rs 10 per unit, while its average sale price is Rs8. The government thus looses Rs. 2.00 on every unit produced. This loss would go up further, if oil prices in the international market rise. The impact the furnace oil price can be gauged from the fact that furnace oil, which was only Rs48000 a year back, is presently hovering around Rs 76,000 per ton. Some estimates put the power sector losses on account of the price differential between the cost and sale price at Rs 200 billion a year. The government allocated an amount of Rs30 billion in the budget during the current financial year as subsidy for the power sector, with a view to offsetting losses and to protect consumers using less than 50 units a month. With distribution companies managing to recover only 80 percent of their receivables, the financial situation further worsened, decreasing liquidity by Rs 100 billion. The recovery being affected primarily because the federal and provincial governments delay clearing their dues. Estimated 19.6pc line losses roughly translate into another Rs 45 billion, if 10 percent for technical losses are allowed. To put it in plain terms, the distribution companies recover Rs 450 billion against an estimated billing of Rs 575 billion whereas the amount needed to balance the books is somewhere around Rs 675 billion. This situation is untenable and cannot be sustained unless the cost of production of electricity is reduced or the electricity tariff is raised. In the absence of allocation of full subsidy to the power sector and the inability to recover the outstanding amount from their customers, it is throwing the power sector into serious financial crises. Unable to pay for the fuel to gear the existing thermal power plants to full capacity, the Ministry of Water and Power often rushes to the rescue. It prevails upon the Finance Ministry to bail out the power sector. The finance Minsitry releases funds to Pakistan State Oil (PSO), which provides furnace oil to both Independent Power Plants (IPPs) and thermal Power plants run by the government owned Generation Companies (GENCOS). The need of the hour is for the government, power sector managers and policy plannersm is to put their heads together so as to bring the power sector out of this financial mess. A combination of an increase in tariff and reduction in cost of production of electricity could accomplish the objective. Electricity Tariffs have already been raised by 78pc during the past two years and any further increase is bound to outrage the people. Electricity generated by gas thermal power stations produce electricity at a cost two and half times less than those run on furnace oil. Regular Supply of gas to thermal power stations will not only decrease the average cost but also increase the efficiency of those plants which are now running below capacity. If gas is allocated by the government to the gas thermal power stations, they would be able to generate more electricity at a cheaper rate. An Energy Summitto be chaired by the Prime ministeris scheduled for May 31 to discuss the present energy situation in the country. Chief ministers of all the provinces, officials of the Ministry of Water and Power, experts, professionals and representatives from public and private sectors will be in attendance. Apart from hammering out a comprehensive and effective energy conservation plan, the summit should take immediate decisions on measures to reduce financial and technical losses in the power sector. It should also allocate funds on an urgent basis to rehabilitate the thermal power plants run by GENCO and their conversion from oil to coal, which can easily add the much needed 1500 MW to the national grid. Has the summit been sufficiently prepared to achieve the required targets? Only time will tell. The writer is former Director General Public Relations, PEPCO