Loadshedding to haunt overloaded transmission system till December

ISLAMABAD: Electricity load shedding would continue to haunt the residents of Pakistan at least until December because the existing transmission and distribution network lacks the capacity to carry more than 19,500 MW, against a peak demand of over 23,837 MW registered during August, a top Power Division official warned.

“We have electricity in abundance, but the transmission and distribution system is not strong enough to carry a load of more than 19500 MW. This is the main reason why the public is still suffering from the menace of load shedding. The Power Division has sensitized Prime Minister Imran Khan and the members of the ECC (Economic Coordination Committee of the federal cabinet) about the systemic constraints,” the senior official told The News.

The new government is on track to take vital decisions in about two weeks on the issues facing the power sector. The authorities have asked the National Electric Power Regulatory Authority (NEPRA) officials to attend the next ECC meeting on Monday to give their input on resolving the problems which have created a record circular debt of Rs1,188 billion.

The Power Division official said that the participants of the ECC meeting held on Wednesday were told that the NEPRA determines consumer tariffs on the basis of assumed 100 percent bill recovery, whereas the recovery of electricity bills stood at 92.69 percent in December 2017. It has since plummeted to 87.20 percent. In the last five years, the system has been deprived of Rs205 billion by the non-payment of electricity bills.

To ensure that the circular debt becomes a thing of the past, the Power Division wants the electricity tariff to be determined on the basis of the factual recovery of electricity bills. It has proposed that the government should pay a subsidy to make up the difference between 100 percent bill payment and actual recoveries.

The Power Division official said that the ECC was told that non-payment of power bills in the newly merged tribal districts of Khyber Pakhtunkhwa and Azad Kashmir, as for tube wells in Balochistan, has contributed to the record level of circular debt. Karachi Electric also owes Rs86.26 billion to the power sector.

The official said that the Power Division has informed the ECC participants that NEPRA has included systemic losses of 16.3 percent in its recommended tariff, whereas the system accrued losses amounting to 18.3 percent. The 2 percent differential absorbed by the power sector has piled up to Rs202 billion. “We want the regulator to include the 18.3 percent losses in the tariff to ensure that the circular debt would never arise again,” the Power Division official said.

The ECC has also been informed that the NEPRA decides the tariff on a yearly basis, instead of every quarter. The delay multiplies the fiscal problems of the power sector. Because of the delay in tariff determination, the power sector cannot increase its tariff on time and has borrow to pay for its operations. “This is how power sector entangles itself in debt servicing,” the official said.

The Power Division official said that the National Transmission Dispatch Company (NTDC) has been tasked with upgrading its dilapidated transmission and distribution system by December. By fixing 31 identified systemic constraints, it would increase load capacity up to 22,000MW, although the peak demand in August stood at 23,837MW.

Electricity demand would tumble in the forthcoming winter season, so there would be no more load shedding by December, assuming that the transmission system is upgraded on schedule. However, the more electricity is generated and consumed, the greater the increase in circular debt, the Power Division official cautioned.