ISLAMABAD – The Senate Standing Committee on Power was Tuesday informed that free electricity worth Rs 15 billion was being provided annually to approximately 190,000 employees of the power sector.
The Senate Committee, which met with Senator Mohsin Aziz in chair, was further informed that the installed generation capacity of the power sector has declined to 39000MW from 42000MW due to the retirement of inefficient power plants, while retirement of five power plants with the installed capacity of 2500MW is in the pipeline. Federal Minister for Power Awais Leghari, briefing the panel on key issues, said they are working on the electricity incentive package. The Power Division is working on winter electricity package and incentive package for the entire year, he added.
He highlighted that K-Electric’s high electricity costs stem from the use of expensive production sources. He also addressed the committee regarding the ongoing independent power producers (IPPs) saga. The committee was told that K-Electric’s power generation costs are excessively high, prompting the government to supply it with electricity from the national grid and provide a subsidy of Rs170 billion to maintain uniform tariffs across the country. The committee recommended that ministry officials conducted a comparative analysis of electricity tariffs in neighboring and regional countries. The panel emphasized the need to consider factors such as heat efficiency, evacuation responsibility, capacity charges, and the performance of underutilized plants. The federal minister assured the committee that the requested information would be provided transparently to the committee.
Secretary of the Power Division Rashid Mahmood Langrial also presented current challenges and statistics in the electricity sector to the committee. He said the installed capacity has now dropped to 39,000 megawatts, as some power plants have retired, contributing to this decline. Additionally, 2,500 megawatts of plants are currently being retired. He also mentioned that 230MMCFD of gas is being provided to captive power plants. He suggested that diverting this gas to gas based power plants could make electricity production cheaper. In June, electricity production drops to 29,000 megawatts, he said.
Senator Shibli Faraz criticized the worst situation of the power sector and asked if neighboring countries have similar circular debt issues. He pointed out that this reflects poor planning and mentioned that he has been hearing the same stories for the past nine years. The Power Division has failed the country, he added. Mohsin Aziz asked that whether capacity payments are being made when electricity production is low? The secretary replied that if a plant remains closed for the entire year, it will still be paid the capacity payments.
“We don’t run the plants because its electricity is unaffordable,” he said, adding that its electricity is so expensive that we only give capacity payment. Secretary said that that electricity in Pakistan is more expensive compared to the region. Langrial noted that industrial demand for electricity is 25 percent and suggested reducing load during May and June. He mentioned that 10,000 to 11,000 megawatts of load comes from fans, with winter loads reaching up to 11,000 megawatts. Industrial consumption continues to decline, he added. Last year, Rs 244 billion from the industry was redirected to domestic consumers as cross-subsidy, the secretary reported. He also highlighted that a subsidy of Rs592 billion was given to 25 million consumers with up to 400 units, which has now increased to Rs692 billion.
Minister Awais Leghari stated that ending electricity theft requires privatization and digitalization. He added that the Power Division is working on an incentive package for electricity, including a winter package and an all-year incentive package. Committee Chairman Mohsin Aziz noted that irregularities of Rs480 billion in payments were detected in 2013.The report of the irregularities was presented in the Senate and was referred to NAB. Chief Executive Officer (CEO) CPPA-G said that the case was referred to NAB that time. Aziz asked that what was the status of the case now, the official of the Power Division had no reply.
Replying to a query regarding the provision of free electricity to the employees of the power sector, the Power Division Secretary revealed that free electricity is only provided to employees of electricity companies, WAPDA, and GENCOs. Approximately 190,000 employees receive free electricity, costing Rs1.3 billion monthly, totaling Rs15 billion annually. Each employee gets on average Rs78,000 worth of free electricity per year. Leghari said that audit report of Muhammad Ali on heat rate was made ineffective by the Cabinet’s arbitration at the time and benefited IPPs. Shibli Faraz suggested conducting fresh audit now, but Leghari insisted on resolving previous issues first before proceeding with the audit. Senator Shibli Faraz added that the Power Ministry needs to plan for seasonal variations and avoid repeating the same records, as the current state of electricity is neither cheap nor reliable in the country. The secretary acknowledged the inquiries and highlighted the underlying drivers behind these issues.
Senator Shibli Faraz questioned the ministry about ways to reduce electricity bills, a concrete plan to cut down circular debt, the past 10-year loan status, and the reforms undertaken by the Ministry. Senator Mohsin Aziz, the chairman, emphasized that the issue of IPPs is long overdue. He highlighted that the current situation has left people struggling with unaffordable electricity, industries considering ceasing operations, and the masses suffering from unemployment. Additionally, electricity theft has become a significant problem for the country. The chairman requested explanations on the areas where electricity theft is prevalent. The minister stated that electricity theft varies by area and is influenced by the level of governance. The secretary of the Power Division added that electricity theft has, in some communities, become a sub-culture, exacerbating the problem. The Committee inquired about power theft in southern Punjab. The Minister (Power Division) informed that more feeders are located in areas such as Rajanpur, D.G. Khan, and Katcha Areas, including Kasur, where losses are the highest.
