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February 7, 2018

Losing power


February 7, 2018

It is time to turn to an oft-repeated complaint about why the power sector in Pakistan performs so dismally. About two weeks back, the Punjab Accounts Committee was informed that line losses in the power sector stood at Rs213 billion annually. A day later, we found out that the CEOs of four distribution companies had been removed from their positions. In the spirit of most interventions in the sector, this measure is likely to be cosmetic as well. The Peshawar, Sukkur, Lahore and Quetta power heads have all lost their jobs, but the performance of these four Discos differs significantly. Pesco is the worst performing distribution company, while Lesco’s performance comes close to the Nepra limit. The larger problem is that the line losses are reported in a strange way, and are for some reason lumped together with electricity theft. This ends up making it seem like they are the same thing, which they are not. Line losses are energy losses during the transmission process. They are caused by a poor transmission system. Electricity theft is energy consumption that is not paid for or energy that is taken out of the grid through illegal means. It makes little sense to lump the two together. The issue becomes clearer when the figures are provided. In the case of the Peshawar Electricity Supply Company, line losses make up almost 33 percent while power theft is around 12 percent of its losses. The line losses for the Sukkur distribution company stand at a similar figure while power theft stands at around 19 percent. Comparably, the Lahore distribution company does much better with only 14 percent line losses. It is unclear whether the CEOs of the distribution companies can do much when the government’s own priorities seem to be cosmetic when it comes to the transmission grid.

What we need is a detailed investigation into what the sources of the high line losses in Peshawar, Sukkur and other Discos are. Lesco has managed to bring its line losses down, although they are still high at over ten percent. Does it have a model that can be reproduced in other Discos? However, it would be far too easy to celebrate Lesco as a success story. Its gross contribution to overall losses remains the second highest at Rs34 billion. Much can be improved at its end, even though it has been able to keep its losses close to the Nepra allowance of 11.76 percent. The losses themselves have little bearing on the Discos themselves as the burden is passed onto consumers through higher tariffs, government subsidies to the loss-making Discos and constant power outages. And so the overall losses of Rs500 billion are eventually transferred to the public. The Punjab Accounts Committee has asked for a more detailed report on the issue and directed the Discos to replace 66KV lines with 220KV lines which reduce line losses in the system. Pepco is focusing on installing new types of meters, which base themselves on the false assumption that the biggest problem in the grid is electricity theft. Its own figures show that problems in the transmission grid are a much larger contributor, which raises questions about the usefulness of ADB funding for new meter installation. If this is the approach that will be followed, it doesn’t matter who will be running these distribution companies. They still remain a poisoned chalice.

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