Caretaker Federal Minister for Water and Power Musadik Malik addressing a press conference. — Photo by APP

ISLAMABAD: The Ministry of Water and Power conceded on Thursday that up to 19 hours of loadshedding was being carried out even in industrial cities like Faisalabad and blamed the finance ministry for the miseries of the people, saying it had not disbursed Rs22.5 billion approved by the caretaker prime minister to improve electricity generation.

“We can substantially minimise the sufferings of the people by bringing down loadshedding to eight hours if we are provided Rs22.5bn committed by the finance ministry on the directives of the prime minister,” Water and Power Minister Dr Musadik Malik said at a news conference.

He said the finance ministry had so far disbursed only Rs5bn that had gone to the Pakistan State Oil to retire its letters of credit, while it was finding excuses to delay more disbursements.

He said the decision for disbursement of Rs22.5bn had been approved on May 20 by Prime Minister Mir Hazar Khan Khoso at a meeting attended by the ministers and secretaries for finance, petroleum and power. Dr Malik said he had repeatedly talked to the prime minister’s adviser on finance, finance secretary and principal secretary to the prime minister over the past two days. The water and power secretary also wrote letters to his counterpart in the finance ministry, but the amount was not released.

Water and Power Secretary Anwar Ahmad Khan said the prime minister had approved the additional amount to maintain power generation at about 12,000MW and contain loadshedding.

He said the power ministry had provided complete details about oil requirements at different power plants as sought by the finance adviser but the only feedback from the finance ministry was that they were working on the issue while keeping in view the overall fiscal space available, according to their interpretation.

Sources said the arguments between the two ministries had reached such a stage that both the minister and secretary for water and power had offered the finance ministry to take charge of the power sector. They said they would step aside if the finance ministry were to micromanage the power plants.

The power ministry was asked by the finance ministry to submit efficiency-wise merit order of power plants for which it could arrange fuel.

When asked about the possibility of his resignation, Dr Malik said he had talked about this and he would have resigned much earlier had he known that he would be made so helpless in mitigating the sufferings of the people in scorching heat, but it would be creating a scene if he took such an extreme decision when he had only a few days to go anyway.

He said he had no doubt that the new leadership would be able to overcome the power crisis within 24-30 months with the right policies. He said he had been invited to brief PML-N leaders and he was impressed with the refreshing ideas, commitment and drive they had to overcome the crisis.

Dr Malik said about 25 per cent of generation capacity was lying idle because of shortage of funds and fuel and another 25pc for technical reasons. For example, a major public sector plant could not be put to use because a minor fan of its cooling plant had been out of order for over two years and nobody had attempted to repair or replace it. This capacity could be brought into use very shortly without any major investment, he said.

He said the government would have to change the regulatory framework to encourage efficiency of the power plants instead of penalising good operators. He was of the opinion that the government could increase the generation capacity and reduce the cost of power production from Rs14 to Rs9 per unit in five years by converting the diesel-based plants to coal, increasing efficiency of the plants and using bagasse plants.

Dr Malik reports from distribution companies showed that the period of loadshedding in urban Islamabad was eight hours and in its rural areas 10-12 hours.

The 4-6 hours loadshedding in Quetta was the least, but its rural areas faced 18 hours of outages.

In Peshawar, loadshedding in urban and rural areas has increased to 12 and 18 hours, while the tribal areas were without power for 17 hours.

In urban Lahore, the period was 10 hours and in adjoining rural areas 16 hours. Faisalabad city remained without electric supply for 16-17 hours and its rural areas 18-19 hours.
Gujranwala suffered 14 hours of loadshedding. The period in urban and rural Hyderabad was eight and 10 hours and Multan 14-15 hours.

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Saudi King Abdullah. – File Photo

ISLAMABAD, May 22: With an ‘amiable’ government in place, Saudi Arabia is expected to extend a bailout package of about $15 billion to Pakistan’s highly indebted energy sector by supplying crude and furnace oil on deferred payment to enable it to resolve the chronic circular debt issue.

A senior government official said the Saudis had been taking reasonable interest in helping out the incoming PML-N government led by Nawaz Sharif.

They had extended a similar special package to Pakistan soon after it went nuclear in 1998 and faced international economic sanctions.

Between 1998 and 2002, Pakistan received $3.5 billion (Rs190 billion at the exchange rate at that time) worth of oil from Saudi Arabia on deferred payment, a major part of which was converted into grant.

According to the official, as soon as the PML-N emerged as the majority party after the May 11 elections, the Saudi ambassador in Islamabad sought a briefing on the country’s oil requirements from the foreign ministry before calling on prime minister-designate Nawaz Sharif in Raiwind, Lahore.

He was immediately provided a position paper, the official said.

Pakistan expects about 100,000 barrels of crude oil and about 15,000 tons of furnace oil per day from Saudi Arabia on deferred payment for three years. The amount involved works out at about $12-15bn.

The facility can be utilised to reduce loadshedding in the short term and provide an opportunity in the medium term to restructure the power sector by minimising subsidies, eliminating circular debt, ensuring recovery from the public sector and reducing system losses to bring it to a self-sustainable level.

“During the package period, the PML-N government can resolve the electricity crisis and develop hydropower projects through a combination of public and private investments and bagasse-based power production by the sugar industry,” he said.

He said the arrangement for oil supplies on deferred payments could be further discussed during Mr Sharif’s first visit to Saudi Arabia soon after assuming the office of prime minister early next month.

Pakistan’s total crude oil import is about 400,000 barrels per day and 30,000 tons of furnace oil. Its total oil import bill stands at about $15bn per annum.

The official said a request for 100,000 barrels of oil and 15,000 tons per day of furnace oil had already been passed on through the Pakistan-Saudi Arabia Joint Ministerial Commission.

A meeting of the commission could be convened soon after the new government assumed charge, an official said.

The Saudi rulers had not taken any interest in the issue earlier ostensibly because of the chill in their relationship with the PPP government.

Large political delegations taken to Saudi Arabia by the PPP government were cold-shouldered, an official said, adding that warming up of diplomatic relations with Iran and the UAE and cancellation of hunting facilities for Saudi royals had also annoyed the kingdom.

The official said the breathing space provided by the likely Saudi package could also be used for renegotiating gas price with Iran for the Iran-Pakistan gas pipeline to bring it down to a sustainable level.

Under the gas sales and purchase price agreement, any party may seek revision of the rates in view of the cost of alternative import options one year ahead of the first gas flows scheduled to take place in December 2014.

The official ruled out any possibility that the Saudi oil package could be used to persuade Pakistan to stay away from the Iranian gas import. He said the project had reached an advanced stage and involved international agreements and, therefore, backtracking was no option, but the development could give leverage to Pakistan to secure lower gas prices.

In a separate decision, the petroleum ministry also decided to stop gas supply to transport sector in Punjab for a week.

A senior official told Dawn that the decision to ban use of CNG in large vehicles was taken by the prime minister to reduce gas consumed by the transport sector.

Public transport and vehicles maintained by the government would be exempted from the ban.

He said owners of CNG stations would be penalised for selling gas to vehicles with engine capacity of over 1000cc. A fine of Rs50,000 would be imposed for first violation and the fine would increase to Rs100,000 for second violation and Rs600,000 for the third violation. In case of fourth violation, the CNG station would be shut for one year, he added.

When contacted, a senior official of petroleum ministry confirmed that the ministry had received directives from the Prime Minister’s Secretariat in this regard, but he said the directives had been forwarded to the Law Division for vetting because their implementation could create some legal complications.

“We are really confused,” he said, adding that the secretary petroleum who was required to sign every summary on behalf of the ministry had not even seen the directives.

The directives have also been sent to two gas utilities and the Oil and Gas Regulatory Authority (Ogra) for implementation.

An Ogra official, however, said the regulator was required to follow government’s policy guidelines duly approved by the Economic Coordination Committee of the Cabinet (ECCC) or the federal cabinet. These directives were neither approved by the ECCC nor the cabinet, he added.

The gas supply to transport sector in Punjab will remain suspended till May 27 owing to closure of Qadirpur gas field for annual maintenance that would reduce gas supply by about 400MMCFD (million cubic feet per day).

“The CNG sector has been notified about suspension of gas supply throughout Punjab from midnight on Tuesday and till morning of May 27,” an official of the petroleum ministry told Dawn.

Four independent power producers (IPPs) in Punjab — Orient, Saif, Sapphire and Halmore — producing over 800mw would also face gas disconnection during the week but alternate arrangements had been made to run them on oil, he said.

He said the Qadirpur’s annual turnaround (ATA) could not be postponed because it had started showing signs that could have led to serious problems in the long run.
Hence it was decided to carry out maintenance to complete the work in less than a week instead of the usually required 10 days.

Both the decisions were immediately rejected by the All Pakistan CNG Association (APCNGA).

Talking to Dawn, chairman of the supreme council of the association Ghiyas Abdullah Paracha accused the caretakers of creating a crisis and trying to divert the attention of the PML-N, which is going to form government at the centre, from the issue of gas shortage.

He said taking such important decisions was beyond the mandate of the caretaker government and it should have left such matters for the incoming government.

Mr Paracha criticised the petroleum ministry’s plan to suspend gas supply to CNG outlets for a week in the name of maintenance of plants and said that this would seriously affect the masses and businesses.

He accused the ministry of assuming the authority of Ogra. Licences issued to CNG operators clearly indicated that any decision regarding gas supply would be taken with consensus but the ministry was taking unilateral decisions, he added.

Power Minister Dr Musadik Malik announced the decision taken by the prime minister, but said injection of public money into a highly corrupt, inefficient and bottomless power sector was not the best of economic decisions.

The decision had nevertheless been taken to provide relief to the people suffering from widespread outages under extreme weather conditions, he said.

“The power sector has plunged into a grave crisis soon after the elections, resulting in serious loadshedding for which we apologise to the nation. But causes of the problem are outside the control of the power ministry,” Dr Malik said at a news conference.

He attributed the problem to disruption in fuel supplies, saying the power sector was getting 19,000 tonnes of furnace oil from the petroleum ministry during the election time that plunged to an average of 11,000 tonnes per day because of non-payments.

On top of that, the ministry cut additional gas supply to power houses by half – from 50 million cubic feet daily to 75MMcfd.

As a result of these factors, the generation tumbled to about 9,500 megawatts from 12,800MW a week ago. He said the demand had increased to about 15,500MW, leaving a shortfall of over 6,000MW.

The minister said after he raised the alarm before the prime minister, the latter immediately called a meeting of the ministries of petroleum, power and finance and ordered disbursement of Rs22.5bn within a day.

About Rs15bn of the amount will be utilised to retire letters of credit of the Pakistan State Oil (PSO) to revive the oil supply chain, while Rs3-4bn has been earmarked to purchase diesel for four efficient power plants in the private sector that were facing closure due to gas cuts. The diesel-based electricity would be expensive, but not much when compared with the suffering of the people, the minister said.

He said a couple of shipments of furnace oil ordered by PSO had to be cancelled or delayed in recent weeks, but one of them had been revived following the decision for fresh disbursements.

As a result, the power generation has again increased to 10,800MW and will improve to about 12,500MW in two days.

Dr Malik said the prime minister had asked the finance ministry to sanction another Rs42bn for disbursement to the power sector next month because Rs22.5bn would cater for only 10 days to maintain the supply at 12,000MW during the current month.

“We do not want to leave the power sector to the elected government in a shape we inherited from our predecessors,” he said in an attempt to justify the allocation for next month when the new government would be in its early days.

He said he had inherited a power generation of 7,800MW and had been able to increase it to 12,800MW in a short period, which meant that the coming government with substantial time and understanding could add another 3,000MW in three months.

Dr Malik said his ministry and the power sector were full of corrupt officials and he had been able to dislodge the linchpin of the mafia by removing some of the key officials, including the managing director of the National Transmission and Dispatch Company (NTDC), head of the National Power Control Centre (NPCC) and a few others at the Jamshoro Generation Company.

“But it would be the job of the next government to take the process forward to get rid of the corrupt rot deep set in the entire system if it wants to bring under control the power crisis, because corruption worth Rs75bn is taking place in a single deal,” he said.

He said the new government, with a broader mandate and resources at its disposal, could substantially bring the system under control only by bringing offline power houses into use, ensuring expected improvement in hydroelectricity generation and controlling theft.

Dr Malik said a random audit over the past few days had revealed that 22 out of 32 grid stations had been closed down in Gujranwala region, the entire Sialkot was out of system for the coming few days and Faisalabad was off grid, while Mansehra region did not get electricity for 18 straight hours.

The minister said power production at the Jamshoro plant could have been made possible at five cents per unit through its dedicated gas supply, but the electricity was being produced at Rs16-18 per unit on furnace oil.

“This is criminal and unacceptable. You cannot run a business by selling a product at Rs8 against its production cost of Rs14,” he said.

He criticised the contracts signed with the Karachi Electric Supply Company and revisions in them introduced by the previous government, but said the caretaker government did not have the mandate to open legal documents during a short period.

The contracts could be revised by making use of violations being committed by the KESC, which the next government would be better placed to look into, he said.

“The new government would have to move quickly for conversion of power plants to coal and co-generation to resolve the crisis,” the caretaker minister concluded.

Senator Ishaq Dar, tipped as the party’s finance minister, will present the next year’s budget which, analysts believe, would set the stage for fiscal consolidation.

If his past track record is any indication, Senator Dar would bring all the off-book hidden expenditures on the table to come clean on what he is inheriting from the caretakers and the PPP government like he did in 2008 by presenting a consolidated fiscal deficit figure at about 7.5 per cent.

Dar has an edge over his predecessors as he enjoys the confidence of the party leadership that would be required to fix the major economic challenges. Unlike Shaukat Tarin and Abdul Hafeez Shaikh who were seen by many party parliamentarians as ‘outsiders’, (limiting their ability to convince PPP leadership on the needed policy direction), Dar would generally get a smooth sailing and support of the party.

This gives Dar little chance to make mistakes because any failure would fall entirely on his own shoulders. He would, of course, also have the policy input and advice of the veteran Sartaj Aziz who is being tipped as Prime Minister Nawaz Sharif’s senior adviser on economy and foreign affairs.

And unlike PPP that had to change five finance ministers in five years of its rule creating a general sense of instability, the PML-N has enough room for continuity and stability of economic policies. It would be expected to take difficult economic decisions like expansion in revenue base, increasing tax-to-GDP ratio, containing public sector losses and creating job opportunities to a growing number of young population through better investment policies.

Given its past record and the election manifesto, the PML-N is expected to push through the economic reform process including deregulation, liberalisation and privatisation it introduced in 1991 and continued after 1997.

The party has committed to making national economy the centre-piece of its priorities and would reorganise its trade and business relations with many of the hitherto neglected regional players like India, Saudi Arabia and the Middle East on top of strengthening economic relations with major western powers.

This would be part of the overall policy to reverse the existing trends of low growth and high inflation. Hence it would be expected to make interest rates congenial for borrowers to kick-start investments in key areas for generating job opportunities.

But how the new finance minister puts together a team of bureaucrats to implement its policies would be seen with keen interest. To start with, the new finance minister is unlikely to enjoy good working relationship with Governor State Bank of Pakistan Yasin Anwar considered a personal choice of President Asif Ali Zardari. However, there is little he can do given Anwar’s tenure will continue until October 2014.

Likewise, he did not have best of relations with incumbent secretary finance Dr Waqar Masood Khan in 2008 and is likely to put together a new team of federal secretaries to run finance, economic affairs and planning divisions and appoint a chairman of the Federal Board of Revenue.

The PML-N would be facing a challenging fiscal deficit situation. Although, caretakers put current year’s fiscal deficit at about 7.3 per cent, indications are that anything below eight per cent would be a blessing given the fact a major part of power sector losses still remain un-quantified and would need to be brought on books.

According to stipulations, Dar is expected to take measures that could reduce budget deficit to about 4.5 per cent next year and stabilise it around four per cent over the next five years.

Going by the PML-N manifesto, Dar would initiate measures to finally reduce current expenditures, excluding salaries, pensions and allowances by one- third and cut losses of PSEs for their ultimate privatisation. He plans a major part of investments to come from the private sector in the shape of public private- partnership given limited fiscal space available in the budget. But his most challenging job would be to reduce subsidies to bleeding power sector that consumed over Rs1.5 trillion in the last four years.

Over the last five months, the gap between power tariffs approved by the National Electric Power Regulatory Authority (Nepra) and applicable rates to consumers has widened from about Rs3.50 per unit to about Rs6 per unit, entailing total additional impact of about Rs200 billion. A major part of this would have to be passed on the consumers in the form of higher tariffs while focusing on losses, theft and recoveries from the public sector consumers as articulated by the party in its election manifesto.

Indications are there that the office of federal adjustor would be strengthened for at source deduction of provincial electricity dues against their shares out of federal divisible pool with a one-time loan to the provincial governments.

This may soon be followed by handing over of distribution companies of Wapda to provincial governments with all responsibilities to ensure timely recovery of electricity bills and reduction in system losses, to put the companies to stand on their own feet and bear the burden of subsidies.

The estimates for foreign inflows and their sources would be one of the significant determinants of the strength of the next year budget. Given the fact that most of the estimates relating to foreign inflows have remained unmet this fiscal year, Dar, having past experience, would have to start the effort from where he had left in 2008. That would involve floating of bonds and divesting of government shareholding in key public sector companies and banks that were shelved on the instructions of President Asif Ali Zardari.

Already, the water regulator has made a significant change in its water management and distribution mechanism by allocating provincial water shares on ‘five-daily’ basis instead of the usual 10-day distribution arrangement to cope with the fast changing situation on the ground amid a low storage level in reservoirs, particularly Tarbela dam.

The good news, on the other hand, is that a rise in temperatures in the northern areas, particularly Skardu, has triggered snow melting, increasing flows in the Indus upstream of Tarbela but this will take a couple of days to make an impact.

“Both Sindh and Punjab are being provided significantly less water than their demands at present,” an official said.

The official said Sindh’s share had been increased to 70,000 cusecs on Sunday from 67,000 cusecs it had been getting for the past five days by enhancing discharges from Tarbela to 50,000 cusecs from 45,000.

Sindh has been demanding about 90,000 cusecs compared with Punjab’s 100,000 cusecs. Both provinces are getting about 30 per cent less water than their demands.

Irsa will review the water availability and provincial demands on Monday and is likely to further increase releases from reservoirs for the next five days depending on improved river flows.

The Punjab government has increased pressure on the water regulator to jack up flows into the Chashma-Jhelum link canal from 5,000 to 14,000 cusecs — a demand it has been insisting on for almost a month without any success.

The Punjab irrigation department has informed Irsa that since the province was not getting its due share through the canal it had been compelled to draw higher quantities from Mangla dam, resulting in higher water losses because of its longer and difficult route. “If Mangla dam is not filled in the first part of the Kharif season, the responsibility would lie on Irsa’s shoulders,” the department is reported to have told the regulator. Irsa has, however, told Punjab that its top priority was to meet requirements of the downstream and perennial canals and releases to the CJ-link could be increased only in case of surplus after meeting perennial usages. This had become all the more important after reports from southern parts of the country, particularly Sindh, about early Kharif crops, particularly rice paddy.

An official said the crop sowing was getting affected in Sindh mostly because of local distribution problems but aggravated by
lower releases from major reservoirs than provincial indents.

As the temperatures in Skardu crossed 27 degree Celsius on Sunday, the snow started melting to show signs of improved flows in the Indus. The mean inflow at Tarbela that stood at about 45,000 cusecs on Friday went up to 59,000 cusecs on Sunday evening.

As a consequence, the water level at Tarbela inched up to1,388 feet from Friday’s 1,385 feet against its dead level of 1,378 feet.
The river Kabul flows also moved up to 76,200 cusecs from less than 70,000 cusecs. Flows in river Jhelum at Mangla increased to 50,311 cusecs from 43,000 as outflows remained unchanged at 42,000 cusecs. The water level in Mangla reservoir increased to about 1,107 feet from 1,105 feet. Its dead level is 1,040 feet.

— File Photo

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has notified an increase in electricity tariff by up to Rs1.55 per unit for all distribution companies of Wapda.

Through a series of orders, the regulator notified tariff adjustments under the monthly fuel mechanism for eight months starting from August 2012 to March 2013 and put in place a mechanism for recovery of these adjustments from consumers in five months, starting in June 2013 to October 2013.

The tariff adjustments will not apply to lifeline consumers using less than 50 units a month and the consumers of Karachi Electric Supply Company.

The tariff adjustments had earlier been restrained by the Lahore and Islamabad High Courts.

Now with the end of the stay orders, Nepra has issued the notifications to enable Wapda’s power distribution companies to start recovering revised tariffs from consumers.

Under the notifications, the average tariff for the distribution companies had been reduced by 5 paisa per unit for the month of August 2012 and increased by 5 paisa per unit for September and 4 paisa per unit for October. This will be followed by 91 paisa per unit increase for November.

The cumulative impact of the adjustments for the four months (August-November 2012) translates into an increase of 94 paisa per unit. Nepra ordered the distribution companies to recover this increase from consumers from June this year.

For the month of December 2012, the regulator determined an increase of Rs1.33 per unit over the average base tariff and ordered the companies to recover it in the billing month of July 2013.

Nepra also notified an increase of Rs1.55 per unit in the average sale rates for the month of January this year and its recovery from August. Another 64 paisa per unit increase in electricity rates worked out for February will be recovered in the billing month of September this year while an increase of Rs1.33 per unit for March 2013 will be recovered from consumers in October this year.

Under the monthly fuel adjustment mechanism, Nepra is required to pass on the impact of variation in cost of power generation arising out of market based changes in the fuel prices including the cost of fuel mix.

The Islamabad High Court had in October 2014 declared the application of fuel charges adjustment as unlawful and hence the recovery of Nepra-determined fuel adjustment could not be implemented. Through an intra-court appeal, a two-member bench of the Islamabad High Court had suspended the single-member bench of the same court.

In separate petitions, the Lahore High Court had also maintained the decision of Nepra in respect of fuel price adjustment but directed that residential consumers consuming 350 units would be exempt from the levy of fuel price adjustment.

The increase in tariff came at a time the country returned after a week of relief to widespread load-shedding that exceeded an average of 11 hours on the countrywide basis. Sources at the ministry of water and power said the ministry of finance and petroleum and natural resources had withdrawn special support they had extended to the power sector on the eve of elections.

Punjab had sought to get its share increased to 100,000 cusecs and Sindh to 90,000 cusecs for the next 10 days, but Irsa told them that their demand could not be met because reservoirs did not have enough water.

An Irsa official told Dawn that the two provinces had sought to increase discharges beyond their allocated share.

“The two provinces are already being provided water as per their share worked out under para 2 of the (Water Apportionment)
accord” of 1991, he said.

In line with provincial shares under para 2 of the accord, releases from Tarbela Dam were, nevertheless, increased to 45,000 cusecs from 35,000 cusecs.

Sindh’s share was increased to 67,000 cusecs from 55,000 cusecs on Wednesday against its demand of 90,000 cusecs.

Punjab’s share from Indus had also been increased to 32,000 cusecs from 27,000 cusecs on Monday, but its demand for
increasing flows through Chashma-Jhelum Link Canal from 5,000 cusecs to 14,000 cusecs was turned down. These flows would remain unchanged at 5,000 cusecs.

Discharges from Mangla Dam were kept unchanged at 44,000 cusecs. On the other hand, releases to Balochistan were increased from 5,000 cusecs to 7,000 cusecs, while there was no change in Khyber Pakhtunkhwa’s share of 3,000 cusecs.

Officials said the water level at Tarbela was recorded at 1,384 feet on Wednesday against its dead level of 1,378 feet. River flows in Kabul stood at 97,720 cusecs, of which about 6,000 cusecs were being discharged into Thal canal.

Water level at Mangla Dam was recorded at 1,105 feet against its dead level of 1,040 feet. Total inflow at rim stations was registered at 171,342 cusecs against discharges below rim stations at 162,400 cusecs. Water level at Chashma Barrage was 640.8 feet against its dead level of 637 feet.

An official notification issued with the approval of the prime minister’s secretariat said that Arif Hameed, the managing director of Sui Northern Gas Pipelines Limited (SNGPL), and Zuhair Siddiqui of Sui Southern Gas Company Limited (SSGCL) had been removed and asked to report to the ministry of petroleum and natural resources.

The government promoted Amir Tufail, deputy managing director of the SNGPL, and Rahat Kamal Siddiqui, deputy managing director operations of the SSGCL, to the post of managing director.

A petroleum ministry official said the removal of the two senior officials had been ordered by the prime minister’s secretariat without seeking the ministry’s opinion.

He claimed that a group of senior officials in the prime minister’s secretariat including principal secretary and head of PM’s Complaint Cell was responsible for removing the chief executives appointed by the PPP government.

But another official said the two had been removed because of their poor performance and gradual increase in the unaccounted for gas to an extent that the two companies were finding it difficult to meet their development and financial obligations.

He, however, agreed that it was inappropriate for a caretaker government to remove the senior executives soon after the elections and said the decision should have been left to the elected government.

He said the head of one of the gas companies had started consulting lawyers to challenge his ‘unceremonious’ removal.

The two officials are regular employees of the gas companies and had a couple of years to reach the age of retirement.

The government also removed the managing director of the Pakistan Mineral Development Corporation (PMDC) retired Brigadier Khalid Khokhar and appointed General Manager Saifullah Khan as the chief executive officer.

The PMDC looks after the mineral resources sector like salt and coal and precious metals.

Mr Saifullah was appointed as managing director of the PMDC a couple of years ago, but he was removed after intervention of the National Accountability Bureau.

The caretaker government had earlier removed Masood Siddiqui, managing director of the Oil and Gas Development Company Limited.

Speaking at a reception here, the minister said the depth of corruption in the National Power Control Centre (NPCC) was beyond imagination, but nobody realised its ramifications. The government had procured two soft-wares in early 1990s for monitoring and transparent distribution of electricity, but they had still not been put to use.

He said during his recent visit to NPCC, the critical centre that controls the entire electricity system, including its generation, transmission and distribution network, was found to be a place like ‘fish market’ where the power system was managed on the basis of telephone calls.
“Unless you get rid of corruption in the NPCC, the performance of power sector could not be improved,” the minister said.

“We have created a business model in the power sector that does not allow genuine investors to come forward and only dubious investors are making investments,” the minister regretted.

The minister said that huge payments were being made to private power producers in the name of capacity payments in a highly questionable manner which was full of corruption.

Giving an example, he said that the National Transmission and Dispatch Company usually contacted the power producers every day for booking of energy purchases from independent power producers on the basis of availability of power plant and fuel requirements. For example, a plant is booked for 1000MW of electricity but in reality the plant provided only 500MW because it did not have enough fuel or faced technical problems, but payment was made to the plant for the entire booking.

“This is misappropriation and corruption of the highest order,” the minister said, adding that payments to private producers were being made after payment of bribe to selected producers who even fail to supply electricity, but payments were being denied to those who provided full committed supplies of electricity.

Referring to fuel supply problems, the minister revealed that during transportation of furnace oil from port to power plant, huge pilferage and adulteration were made and public sector generation companies were involved in this business to the extent of 80 per cent.

“As a minister I wanted to take some critical and bold decisions to end the ongoing mess in the power sector which is also causing unprecedented load-shedding, but was forced to retreat because of severe hurdles created by an influential and powerful network within the power sector,” Dr Malik said.

He said the power regulator had allowed transmission losses of 2.5 per cent last year against the actual losses of about 2.9 per cent which had now increased to 3.6 per cent this year with same distribution and transmission system.

The minister expressed surprise that though there was massive theft in electricity supply, it has conveniently been described as an administrative loss and this was official!

He said that distribution companies in Punjab were comparatively efficient, but there was massive figure fudging among these companies as well, adding that he had ordered an audit of 22 ongoing power projects, most of them hydropower, and found that those scheduled to be completed in 2010 had still not achieved more than 60 per cent progress.

He also revealed that relevant agencies were reluctant to give details of cost overruns and losses to national economy owing to delayed completion of projects.

“They are not ready even to give details about those responsible for construction of these projects,” the minister said, adding that had these projects been completed in time, there would have been no load-shedding now.

In reply to a question, Mr Malik said the power sector had been designed on the business model of countries like Saudi Arabia and Qatar who were oil producers. But this model was not sustainable for oil importing countries like Pakistan.

In the generation sector, the minister said that efficiency and heat rates – basic parameters of power generation throughout the world — were missing in Pakistan and it had resulted in huge build-up in power tariff which was ultimately paid by consumers or by the government.

“This is shameful,” the minister said, adding that heat rate test and efficiency parameter test were basic requirements which were done every year in the entire world, but it has not happened in Pakistan for years.