Circular crisis

With Karachi under a debilitating power crisis once again, the inevitable question is who is to blame. With ten-hour outages the norm in the city, the National Electric Power Regulatory Authority (Nepra) has asked for a detailed report from K-Electric to explain why the power outages are happening. Nepra has also announced the constitution of a high-level committee to investigate the issue and a team will be visiting Karachi to undertake the inquiry. The decision by Nepra to undertake an inquiry on public demand is a positive one, but it is a report that must be prepared quickly and shared with the public. K-Electric has blamed the limited gas supply in the city for the electricity problems, saying that Sui Southern has been unable to provide the scheduled power. The Sindh CM has already written to the prime minister to push K-Electric and SSGC to take action.

The main dispute between the Sui Southern Gas Company and K-Electric is over Rs10 billion in unpaid bills. As a result, the SSGC has restricted gas supply to K-Electric, which has meant that its gas-fired power plant is no longer running. K-Electric maintains that it asked for increased supply in February, which is a commitment that the SSGC should have met. Moreover, it says that it cannot pay the SSGC until the Karachi Water and Sewerage Board pays its outstanding dues to the company. This raises the prospect of both companies effectively holding the public hostage.

The intervention by Nepra will hopefully be able to bring the matter to a close. The KE-SSGC-KWSB story is one that is symptomatic of the circular debt crisis that the entire power sector suffers. One must wonder how Nepra can intervene to solve the debt issues in K-Electric without coming up with a formula for the larger power sector. The committee proposal from the Sindh CM to resolve the payment disputes between these companies could solve this crisis in the short term but it is unlikely to offer a real solution unless such mechanisms are institutionalised. Each actor is pushing responsibility onto the other. If the public goes to the CM, the CM will push the buck to the prime minister. If the public complains about K-Electric, the company will blame the SSGC. This is not how the power crisis will get solved. This is an internal dispute between government service providers that the public does not need to suffer the consequences of. One hopes that Nepra will come up with a permanent solution.