Consumers languish as huge power surplus goes down the drain

ISLAMABAD: As many as 485,000 applications for new electricity connections are lying with the distribution companies (DISCOs) although Pakistan runs a power surplus to the tune of 15,000 megawatts per month on average, The News International has learnt on good authority.

In other words, the country pays PKR 400-500 billion a year to power generation companies (GENCOs) in capacity charges, while nearly half a million consumers remain without access to power supply

According to official figures available from the Ministry of Energy, Pakistan has a surplus of 10,000 megawatts of electricity on an average during the summers when demand peaks, which doubles in winter as the electricity demand eases.

The News contacted Minister Power Hammad Azhar to know the reason for delay in issuance of new connections and the piling circular debt. He was repeatedly called but his phone remained unattended.

If we take a closer look at the pendency of applications, MEPCO (Multan Electric Power Company) tops the list with 218,012, LESCO (Lahore Electricity Supply Company) comes second with 107,866, and PESCO (Peshawar Electricity Supply Company) is at number three with 4,664 applications pending.

The other DISCOs include IESCO with 44,225, GEPCO with 51,030, FESCO with 54,278, HESCO with 3,069, SEPCO with 524, QESCO with 470 and K Electric with 17,705 applications pending as of 30 June 2021

Last year, the Power Division submitted a plan before the federal cabinet to eliminate circular debt by December 2020, but it fared no differently from the past efforts as circular debt continued to balloon at an ever-higher rate as compared to previous years.

The last three years saw power tariffs rise by almost 45 percent, but the sector still piled up more than PKR 2.3 trillion in circular debt, which is still on the rise notwithstanding the government’s tall claims to eliminate it.

A year-wise study of increases in circular debt over the last five years reveals that although the increase during the current year dipped somewhat from the last year's level, it is still higher than the increase recorded in 2016-17. Circular debt stock rose to PKR 818 billion in 2016-17, PKR 1,127 billion in 2017-18, PKR 1,618 billion in 2018-19, PKR 2,151 billion in 2019-20, and PKR 2,280 billion in 2020-21.

Further analysis shows that payables due to IPPs and GENECOs stood at PKR 379 billion in 2016-17, PKR 544 billion in 2017-18, PKR 812 billion in 2018-19, PKR 1,147 in 2019-2020, and PKR 1,350 billion in 2020-21. Circular debt payable to GENCOs by Power Holding Company through commercial bank loans stood at PKR 818 in 2016-17, and rose to PKR 930 billion in 2020-21.