LAHORE: Appointment of experts with vested and conflict of interests while ignoring the fit and proper criteria in the name of power sector reforms is causing further increase the energy cost which resulted in increase in cost of doing business.
The concept of Boards in the energy sector was introduced to improve the working of power sector by formulation of policies which improve the efficiencies and bringing down power generation and distribution cost was marred with the appointment of non-practitioner and political interest appointees. This has increased the cost of distribution companies (DISCOS), rather to reduce the energy cost of consumers.
These views were expressed by experts including former federal secretary power division Irfan Ali, Former Managing Director PEPCO Tahir Basharat Cheema, President Lahore Chamber of Commerce and Industry (LCCI) Mian Nauman Kabir on discussion organized by Lahore Economic Journalist Association (LEJA) on ‘Energy Sector Reforms – Increase in Cost of doing Business’, here on Thursday. The session was convened by LEJA President Muhammad Sudhir Ch.
Irfan Ali speaking on occasion said during the last three years the appointees in Boards the name of reforms managed to increase their meeting attending fee to three times which increased the expenses of the DISCOS. But not a single reform is come so far. Further, the privatization of power sector is impossible in the uniform tariff existence. The government notified a uniform power tariff for all DISCOS irrespective of efficiencies and inefficiencies of different companies.
Irfan referring his two years tenure as secretary of the power division pointed out that the massive campaign against the power theft was launched across the country which resulted in increase in additional almost Rs 260 billion revenue collection from the previous year. This was made possible only with the political support. The power theft could minimized with political support when the elected government decided it will not back the power theft activities, nor ask the transfer and posting of officials it could controlled.
Irfan mentioned The IMF pressurized to end the power sector subsidy on the life line consumers which was averted during his tenure. However, power tariff is adversely affected by the rupee devaluation and consumers are suffering. Monthly circular debt was brought down to Rs 12 billion from Rs 35 billion which also witnessed in overall circular debt stock, he added.
On energy mix, he pointed out that a demand driven estimate was already prepared during his time from National Transmission and Dispatch Company (NTDC) till 2040 under which the cheapest available energy will be acquired in accordance with the country requirements while no additional energy will be added into the system to avoid any capacity and other charges. However, this mix was changed by NEPRA. He believed that the power sector issues could not be resolved in one night. There is need of concentrated efforts on energy generation, distribution, supporting the line staff and political will as the theft was bringing down during his tenure.
Further, privatization was not possible while the existing human resource in the power sector have ability to correct the system with political support. Tahir Basharat Cheema suggested establishment of Power Sector Advisory Committee similar like Economic Advisory Committee (EAC) with a task of policy making and advise on sector to government. There are issues in the IPPs contract, while the government is not financing the sector while the sector is asked running own its own.
So once the project is completed on investors money, or loans cost of energy increases. Additionally, the higher invoice of power station which also approved by government increasing the energy cost. Further, the consumer is indiscipline. He believed that privatization of the power sector not possible even in next one and half decade no government has political capacity of took is huge responsibility. Cheema pointed out that overall default money of the power sector is Rs 1.6 trillion out of which Rs one trillion is due on private sector and Rs 600 billion on the public sector.
Responding to a question about political appointments in the Board including the Chairman of the NTDC Naveed Ismail, Cheema revealed that the Securities & Exchange Commission of Pakistan (SECP) had made a fit and proper criterion for board members appointments, and which should be strictly followed.
Those individuals who do not fall fit on the criterion and if there is any conflict of interest, should not the Boards. Further, made staggering revelation at one former official with non-executive authority who as close advisor to Prime Minister Imran Khan, managed to place around 42 of his closest aides on the power sector Boards, and questioned that in such cases how the good policies could be made and followed. He also believed that the Boards should be worked within their limits and should not take or use the powers of CEOs and executives the companies.
Irfan Ali commented that Lahore High Court an ongoing petition against appointment referred it to the Secretary Cabinet Division and hoped that the Division will address it in accordance with within the stipulated timelines in line with the order of the court orders.
Mian Nauman Kabir pointed out that government ends the stakeholders’ representation on DISCOS as previously the business community representatives were also on the LESCO Board. However, now the government did not give them representation on Boards.
He said the cheap energy and cheap financing were two key components for economic growth these country. If government ensure these two components nothing can stop, their country from progress. He also stressed of improving energy mix by focusing towards renewables cheaper and environment friendly energy generation.