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Published 03 Mar, 2020 06:57am

Power emergency

IT might sound like alarmist talk when the power sector regulator advises the prime minister to declare a ‘power emergency’ in the country. But given the discrepancy between the figures concerning the circular debt presented by the power bureaucracy and the regulator, perhaps the call should be taken seriously. The power bureaucracy has long been notorious for its total lack of transparency, especially with regard to its reporting of financial data. When pressured by its political bosses to improve its performance, it routinely resorts to managing the numbers rather than the outcomes on the ground, with the result that it is able to show an improvement in performance without actually having achieved anything. The regulator, Nepra, has now reportedly told Prime Minister Imran Khan directly, and in the presence of high officials from the power bureaucracy, that the circular debt figures being reported by the latter are not correct; it has presented its own figures as a counterpoint. For the period ending Dec 31, to take one example, there is a Rs74bn discrepancy in the amount of the circular debt that was reported by the power division and Nepra. The nature of the power system is such that there is no way to reconcile the two different numbers, other than sending both the parties into a room with a neutral arbiter of some sort, who is able to emerge with the correct amount.

Given this lack of transparency, the continuing rise of the circular debt indeed looks like an emergency situation. The government prefers to blame this situation on the rising capacity payments, given the recent additions to power-generation capacity under the previous government. But with such opacity in the figures, it is difficult to accept this claim at face value. It could just as easily be the result of poor billing and recoveries. Perhaps while they are busy reconciling their numbers on the circular debt, those in charge can also produce an independent analysis of what is driving the current increase. There was always a concern over the rising capacity charges that have come with the new additions under the last government. Warnings were even sounded from within at that time, but they were quickly brushed aside as the power projects continued. It is becoming imperative to get to the bottom of what has gone wrong, because the circular debt is now touching Rs2tr. This climb cannot be sustained forever.

Published in Dawn, March 3rd, 2020

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