The minister for Water and Power, Khwaja Asif and Secretary, Water and Power, Nargis Sethi, were severely criticised during a recent meeting of the Economic Co-ordination Committee of the Cabinet for over billing electricity consumers. This followed a meeting of the cabinet chaired by the Prime Minister who had reportedly taken serious notice of claims of over billing across the country during the last two months. The Prime Minister set up a committee to be headed by his Advisor on Energy Musaddaq Malik to submit a report on the matter while urging the Ministry to redress genuine grievances of the consumers.
Be that as it may, it is relevant to note that bills for the last two months were considerably higher for two reasons. First and foremost the government did raise rates as per its agreement with the International Monetary Fund under the Extended Fund Facility (EFF) with the objective of reducing subsidies that were accounting to over 400 to 500 billion rupees per annum that the government could ill afford. And secondly the government announced a revision of its tariff structure implying thereby that those who were paying differing rates for using different slabs would now pay the tariff payable for the highest slab. In other words, a consumer using 700 units per month would no longer be charged a different lower subsidised tariff for say the first 100 to 200 units but would pay the higher tariff for all units consumed.
What is relevant, however, to note is that over billing in Pakistan is not a function of inadvertent or/accidental error on the part of the meter readers but is considered to be an outcome of a deliberate policy premised mainly on inefficiencies of the dilapidated infrastructure and large-scale theft of electricity in this country. Thus the norm is that while electricity companies provide an x amount of electricity to all its consumers nation-wide the actual billable amount is considerably less with many consumers using illegal kundas (connections) to access electricity. This illegal use either gets billed into accounts of autonomous bodies/federal and/or provincial governments with the flawed rationale being that the public sector will not challenge bills (this is a serious bone of contention between the federal government and the Sindh government) or large private consumers who witness a spike in their bills. In other words, those who actually pay their bills are paying the cost of power theft and that is one factor that creates considerable fury against the Ministry of Water and Power.
Why doesn't the Ministry of Water and Power proactively proceed to cut down theft? The Minister of State for Water And Power, Abid Sher Ali, created a furor when he accused provinces other than Punjab of being responsible for non-payment of bills, however, his campaign to end theft and to cut-off connections to those localities who do not clear 80 percent of their bills has neither reduced power sector receivables (in fact they have increased since last year) nor improved efficiencies within the sector notably transmission and distribution losses that remain one of the highest within the South Asia region.
What is particularly disturbing is that officials in the Ministry of Finance acknowledged to Business Recorder that there is no sign of improvement in the power sector. And there appears to be no effort under way to improve performance either. The inter-circular debt that was cleared on the last day of fiscal year 2012-13 has resurfaced and there is wide variation of the amount with Nargis Sethi maintaining its quantum around 238 billion rupees while other officials in the Ministry claim its closer to 400 billion rupees. The reason for this variation is that the debt has not even been reconciled which is unfortunate. Surely the Prime Minister must accept by now that the Water and Power Ministry is not up to the mark and takes appropriate measures to change it and gives time bound action targets to them to ensure that the entire system is more effective than what the country has been subjected to for the past seven years.
Friday, September 19, 2014
Pakistan : Overcharging in electricity bills
The minister for Water and Power, Khwaja Asif and Secretary, Water and Power, Nargis Sethi, were severely criticised during a recent meeting of the Economic Co-ordination Committee of the Cabinet for over billing electricity consumers. This followed a meeting of the cabinet chaired by the Prime Minister who had reportedly taken serious notice of claims of over billing across the country during the last two months. The Prime Minister set up a committee to be headed by his Advisor on Energy Musaddaq Malik to submit a report on the matter while urging the Ministry to redress genuine grievances of the consumers.
Be that as it may, it is relevant to note that bills for the last two months were considerably higher for two reasons. First and foremost the government did raise rates as per its agreement with the International Monetary Fund under the Extended Fund Facility (EFF) with the objective of reducing subsidies that were accounting to over 400 to 500 billion rupees per annum that the government could ill afford. And secondly the government announced a revision of its tariff structure implying thereby that those who were paying differing rates for using different slabs would now pay the tariff payable for the highest slab. In other words, a consumer using 700 units per month would no longer be charged a different lower subsidised tariff for say the first 100 to 200 units but would pay the higher tariff for all units consumed.
What is relevant, however, to note is that over billing in Pakistan is not a function of inadvertent or/accidental error on the part of the meter readers but is considered to be an outcome of a deliberate policy premised mainly on inefficiencies of the dilapidated infrastructure and large-scale theft of electricity in this country. Thus the norm is that while electricity companies provide an x amount of electricity to all its consumers nation-wide the actual billable amount is considerably less with many consumers using illegal kundas (connections) to access electricity. This illegal use either gets billed into accounts of autonomous bodies/federal and/or provincial governments with the flawed rationale being that the public sector will not challenge bills (this is a serious bone of contention between the federal government and the Sindh government) or large private consumers who witness a spike in their bills. In other words, those who actually pay their bills are paying the cost of power theft and that is one factor that creates considerable fury against the Ministry of Water and Power.
Why doesn't the Ministry of Water and Power proactively proceed to cut down theft? The Minister of State for Water And Power, Abid Sher Ali, created a furor when he accused provinces other than Punjab of being responsible for non-payment of bills, however, his campaign to end theft and to cut-off connections to those localities who do not clear 80 percent of their bills has neither reduced power sector receivables (in fact they have increased since last year) nor improved efficiencies within the sector notably transmission and distribution losses that remain one of the highest within the South Asia region.
What is particularly disturbing is that officials in the Ministry of Finance acknowledged to Business Recorder that there is no sign of improvement in the power sector. And there appears to be no effort under way to improve performance either. The inter-circular debt that was cleared on the last day of fiscal year 2012-13 has resurfaced and there is wide variation of the amount with Nargis Sethi maintaining its quantum around 238 billion rupees while other officials in the Ministry claim its closer to 400 billion rupees. The reason for this variation is that the debt has not even been reconciled which is unfortunate. Surely the Prime Minister must accept by now that the Water and Power Ministry is not up to the mark and takes appropriate measures to change it and gives time bound action targets to them to ensure that the entire system is more effective than what the country has been subjected to for the past seven years.
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