Power issues

The country is currently experiencing an electricity deficit of over 5,000 MW which has forced authorities to reduce load to reduce the load on generation infrastructure, leading to power outages across the country. This is not the result of force majeure, but a perfectly shoddy job by power managers, who, according to independent experts, appear to be out of their tumble. To make matters worse for consumers, Nepra has also approved an additional fuel cost adjustment (FCA) of almost Rs 4.7 per unit for former Wapda (DISCO) distribution companies. For K-Electric, there will be another Rs3.3 per additional FCA unit. The FCA for electricity consumed in February for DISCOs is expected to yield more than Rs 38 billion in additional funds for companies and for January almost Rs 3.5 billion for K-Electric in April.

DISCOs have repeatedly requested an increase in the FCA to generate additional funds. There are two important points here. First: Whatever fuel adjustment is made, consumers end up bearing all the extra burden as they pay more for their bills that include such adjustments. In fact, “adjustment” is just a euphemism for the cost consumers pay to generate additional funds – money – for distribution companies. Two: the shortfall that consumers face even after integrating all these “adjustments”. The shortfall of almost 5,400 MW is not small in scale or low intensity in view of the crisis that will hit consumers. Even more disturbing is the fact that this deficit is not caused by a lack of capacity to generate electricity. The main reason is that the required fuel volumes are not available to support electricity generation which is highly dependent on a constant and uninterrupted fuel supply. Another reason for the shortfall is not the ability but the technical inability to rectify the trip at the Karachi Nuclear Power Plant (K-2). Unless our energy managers are able to keep K-2 constantly in order so that it does not frequently exit the system, the gaps will persist. There is also an inordinate delay in the commissioning of K-3, which is still in the testing phase. To compound this ordeal for consumers, there are also repeated technical flaws in Chashma Plant-1.

The way the government has managed – rather mismanaged – our electricity sector over the past two years leaves a lot to be desired. If the government claims that 40,000 MW of generation capacity is available, we are entitled to wonder why the country faces a shortage of more than 5,000 MW, especially when summer hit the country. The government has approved unrealistic baseline fuel cost estimates that do not match regulators’ involvement. The “experts” who manage the electricity sector must have better analytical skills coupled with effective expertise in financial management. When actual fuel costs are consistently much higher than the benchmark rate, it reflects on poor management skills that ultimately affect common consumers across the country. The citizens of Pakistan cannot afford more and repeated price shocks like this, nor are they ready for an increase in basic electricity tariffs which increase their burden. They need affordable, uninterrupted power, not 10-12 hour load shedding.

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