Saturday June 22, 2024

Pakistan’s national grid is ‘bankrupt’: Bloomberg

By Monitoring Desk
September 13, 2018

NEW YORK: Pakistan’s power transmission and distribution system is “bankrupt”, which requires extensive overhauling, Bloomberg says in a report.

“In Pakistan’s Tharparkar desert, Chinese and Pakistani workers toil in the blistering heat to complete the construction of a massive open pit coal mine and an adjacent 660 megawatt power plant four months before schedule. The roadblocks will come soon after,” the report says.

“When Engro Corp, one of Pakistan’s largest conglomerates, which is partnering with China, begins generating electricity from the plant in December, it will hit a distribution and transmission network that is essentially ‘bankrupt’, according to Shamsuddin Shaikh, the chief executive officer of Engro’s energy arm,” it added.

Bloomberg quoted Shaikh as saying, “The system has already collapsed, really the system is just existing because the government every few months will churn out some money, dole out some money and the system keeps on working.”

“Lots of overhauling is required. Distribution needs to be improved, the theft needs to be removed from the system,” he added.

The report says Pakistan has added half of its power generating capacity in the past five years with Chinese help but a weak distribution network means companies and households are still bereft of electricity. Prime Minister Imran Khan faced immediate complaints after he was elected premier by lawmakers last month when the nation’s largest city Karachi was hit by an all-night blackout. Residents in the metropolis of more than 15 million took to Twitter to vent anger at the local distribution company K-Electric Ltd and mock Khan’s promise of a new Pakistan.

“Widespread theft, along with a bloated debt and imbalanced payments system, are the major causes of Pakistan’s electricity challenge. Government-mandated tariffs aren’t high enough to recover costs and subsidies are rarely paid on time, leading to what is known locally as circular debt that has accumulated to about 1.2 trillion rupees ($9.7 billion), according to the finance ministry,” the report says.

“It’s not possible for anybody to give that money, they have to improve the system,” said Shaikh. “They need to privatise the distribution system, they just cannot go on like this.”

According to Bloomberg, “Khan’s government, which is facing a potential bailout from the International Monetary Fund, has pledged to reduce that debt by fixing the aging transmission network and limit distribution losses.