Mehtab Haider
The cash-bleeding power sector continues to face a whopping loss and the government had to raise the base tariff by Rs 5.70 per unit so the average unit price has gone up to Rs 35.50 per unit with effect from July 1, 2024.
Earlier, the average baseline tariff stood at more than Rs 29 per unit. To secure IMF’s bailout package, the government has hiked the electricity prices in the country. To please the IMF program, the government fully implemented the prescription given by the IMF. In the last two decades, the policy of raising tariffs has failed to achieve the desired results. Still, the policymakers are continuously raising the tariff without bringing other desired improvements in the structure of the power sector.
With such a massive hike in power prices, the power sector will secure revenues of Rs 3.6 trillion during the current fiscal year.
Amid increasing the tariffs on both electricity and gas, the monster of circular debt continues to rise and crossed the psychological limit of Rs 5 trillion in the last fiscal year. The cost recovery of power generation will remain a pipe dream in the wake of a rigid energy mix and without undertaking much-needed structural reforms. Without plugging leakages, the loses of the power sector will remain unbridled.
First of all, there is a need to analyze the burden of the recent hike in baseline tariff.
The protected consumer falling in the slab of 1-100 units per month will have to pay 51 percent more in tariff while the slab of 101-200 will pay 41 percent more. For the unprotected consumers, the first four categories will experience a 22 to 43 per cent increase in their power tariffs.
Those falling under the slab of 201-300 units per month will pay 26 per cent more as their tariff has increased by Rs7.12 per unit because their tariff has hiked to Rs34.26 from Rs27.14 per unit. Those who fall in the fourth category of the 301-400 units’ slab will experience a 22pc surge in the tariff as their tariff has jumped by Rs7.12 per unit to Rs39.15 from Rs32.03 per unit.
To improve the governance structure, the government has dissolved the boards of nine Power Distribution Companies (DISCOs) and approved the names of new Chairmen and members of the Board of Directors.
The appointment of independent directors/Chairman of the Board of Directors of various DISCOs was recommended for FESCO Mr. Omar Farooq Khan was appointed as Chairman while Ms Zoe Khurshid Khan, Eng Pervez Iqbal, Adil Bashir, and Amir Zia as members of BODs.
For GEPCO, Hamayat Ullah Khan has been appointed as Chairman/independent director and Tahir Ali Khan, Faal-e-Kjaliq, Ms Saima Akbar Khattak and Saud Azam have been appointed as independent directors.
For the HAZECO Board, the government has appointed Hamayat Ullah Khan as Chairman/Independent Director. The government appointed Tahir Ali Khan, Fazal-e Khaliq, Ms Saima Akbar Khattak, and Saud Aazam as members of independent directors.
For IESCO, Dr Tahir Masood has been appointed Chairman/Independent Board member. Other members included Syed Aly Murtaza, Aamir Matin, Ms Amna Abbas, and Rana Abdul Sattar.
For LESCO, Mr Amer Zia has been appointed as Chairman and other members include Zafar Mahmood, Zoe Khurshid Khan, Asad Shafi, and Tahir Bashrat Cheema. For MEPCO Boards, the government has appointed Hamayat Ullah Khan as Chairman and other members included Tahir Ali Khan, Fazal-e-Khaliq, Ms Saima Akbar Khattak and Saud Azam.
For the QESCO Board, the government has appointed Mahfooz Khan as Chairman and other members included Rehmat Ullah Baloch, Tahir Rasheed, Roshan Khtshad Bharucha and Ahmed Ur Rehman.
For the TESCO Board, the government appointed Hamayat Ullah Khan as Chairman and other members of BoD included Tahir Aali Khan, Fazal-e-Khaliq, Ms Saima Akhtar Khatak and Saud Azam. The committee also asked the relevant authorities to come up with fresh names for the two remaining DISCOs in the next meeting.
There are some names on the board members who have close liaison with the incumbent rulers. They might be appointed on merit but the government must come forward and provide an explanation why such persons were appointed on the boards of DISCOs.
Without changing the energy mix, plugging leakages, and improving governance structure, the power sector losses will never be curtailed.
