UTILITY
Distraught Hassan Gillani, a journalist by profession, has posted his electricity bill for August on his Facebook wall. He lives with his mother in Islamabad, and the two members of the household have been receiving inflated bills from the Islamabad Electric Supply Company (IESCO) for the last couple of months.
To save on their energy bill, the mother and son had been using only one of the installed air conditioners throughout the summer. However, this did not help them in controlling their electricity bill, and they were shocked to receive a demand for the payment of Rs244,000 by the IESCO.
It is not for the first time that Gillani has received an inflated electricity bill. Last month, he was delivered a bill worth Rs300,000 by the power utility company.
After hectic efforts, and beseeching the IESCO officials, he was able to get that bill revised to 45,000 rupees.
“Even this amount (Rs45,000) is too much, but I paid it to get rid of the metal torture and the hope that the same mistake won’t be repeated,” he said. But to his utter shock, he received another exorbitantly high bill. “How can I pay such big amounts every month? It is just impossible,” he laments.
While excessive billing might have been caused by a technical fault or an oversight by the billing department of the power distribution company, as is the case with Gillani, the concerned officials never admit it.
People have been complaining about electricity expenses for a while now. Ironically, it is happening at a time when power tariffs throughout the world are going down due to sharp fall in the fuel prices in the international market, particularly petroleum prices. Contrary to the global trends, the prices of energy are showing an upwards trend in Pakistan.
Moreover, the people are made to pay very high for a commodity that it is not available to them round the clock. In Islamabad, the federal capital, people face a minimum of six hours of power cuts – commonly known as loadshedding – every day, while in the peripheral areas, it ranges anywhere between eight hours and 10 hours a day. In far flung areas, the situation is much worse.
A cursory look at an electricity bill reveals that an ordinary consumer pays much more than what he actually consumes, and is also held accountable for the negligence, incompetence and corruption of the government departments and officials.
Apart from paying the cost of electricity, the consumer is made to pay a set of duties to the power supply companies like IESCO, LESCO etc.
These include:
1. Financing Cost Surcharge:- A flat surcharge at the rate of Rs0.43 per unit is levied on all consumers.
2. Fuel Price Adjustment (FPA) Surcharge:- This duty accounts for the fluctuations in the prices of the fuels like crude oil, furnace oil and others used in the power plants. (In view of the decline in the oil prices, this surcharge is being returned to the consumer and that’s why it figures in negative in the bills.)
3. Tariff Rationalisation (TR) Surcharge:- It is the money a consumer pays for none of his faults. This surcharge is meant to minimise circular debt and harmonise tariff variances. Interestingly, its amount is much more than the Fuel Prices Adjustment (FPA) surcharge which is returned to consumer. In other words, the consumer is overcharged under FPA which is returned to him much later, but still the consumer is forced to pay much more money under the TR surcharge. For example, in a monthly bill amounting to 14,197 rupees, the consumer is returned 1,544 rupees under FPA but he is asked to pay 3,072 rupees under TR surcharge.
In addition to these charges by the power supply companies, there is a set of duties collected by the government also through the electricity bills.
These duties include:
1. Electricity Duty (ED):- It is levied by the provincial governments.
2. General Sales Tax:- It is levied on the total cost of electricity consumed and usually figures in the range of 17 to 18 percent depending on the region the consumer lives in.
3. PTV Fee:- A flat fee of Rs35 rupees per month is collected from all electricity consumers of the country under PTV fee head.
4. Neelum-Jhelum (NJ) surcharge:- Around one percent of the total cost of electricity is charged from the consumer to raise funds for the 969MW Neelum-Jhelum Hydropower Project.
5. GST on FPA:- The government also charges GST on Fuel Prices adjustment but it appears in negative in most of the bills.
6. Excise duty on FPA:- It also figures negative in majority of the bills.
Though the government claims it had made electricity affordable for the poor masses, as those who used it more paid more, industry officials say the power tariffs are too high.
Using simple mathematics, one can find out that a consumer pays 30 to 40 percent more than the actual cost of electricity under different heads.
While such duties are levied in other countries to improve the efficiencies of the utilities, in Pakistan they are imposed to make up for the losses incurred because of the mismanagement.
“The poor consumers are being punished for the mismanagement and corrupt practices of the people who are entrusted to manage the affairs of this vital sector,” said an official of the National Electricity Power Regulatory Authority (Nepra).
“They recover their losses by squeezing the consumers, instead of overcoming their own shortcomings,” he added.
The present government cannot be blamed for the sorry state of affairs in the power sector. Successive governments not only failed to address the problems afflicting this sector, but multiplied the sector’s woes and difficulties. However, it is unfortunate that the present government also did not take effective measures to address these problems.
The present government soon after coming into power paid off 480 billion rupees in circular debt, raising hopes that it would take effective measures to stop this problem to recur. But the spectre of circular debt still looms over the country’s economy, and according to some estimates, accounts for nearly six percent of the GDP.
The problems like line losses, distribution losses as well as corruption in the power sector still exist.
Pakistan’s international donors have been pushing the country for reforms in the energy sector for long, as they are vital for the economic recovery.
The present government has intensified its efforts to launch new power projects to overcome the power shortages.
Prime Minister Nawaz Sharif is taking personal interest in these projects and has been visiting the project sites to push for early completion. He had promised to end loadshedding by 2018, not only that, but he had also committed to providing “cheap and affordable” electricity to the masses.
Industry officials though wonder how this could be achieved, as all indicators show that the power produced by new projects would be much more expensive.
“The problems of losses, circular debt, mismanagement and corruption are more serious than power shortages. If we produce more electricity without addressing these problems, the situation will aggravate further,” the Nepra official said.
He said Pakistan currently utilised only 60 percent of the installed capacity, while the remaining was not being exploited due to inefficiency, incompetence and other problems.
“If we do not address these problems, then much of the new generation will also go down the drain. It will not alleviate but aggravate our crisis.”
Whether government is willing to undertake bold measures to address these issues, or not, the observers are doubtful. Under the present circumstances, when the government is facing growing protests from the opposition parties, it is unlikely to take unpopular steps involving political risks.
The writer is a senior journalist based in Islamabad
