Islamabad, Pakistan, 11/02/2021 / Islamabad News Bureau /
Loadshedding is common in Pakistan, where the current power system discourages efficiency and business as usual has become unsustainable, with over 1.2 million applications outstanding for new connections despite surplus generation capacity.
Prime Institute, a private sector research tank, came to this conclusion in its recent “State Owned Electricity Distribution Companies — A 5-year Performance Review,” which found inadequate performance of state-owned power sector Discos and policy changes.
“Existing framework discourages efficiency, while business as usual cannot continue,” the report states, adding that loadshedding is nevertheless common despite surplus generating capacity. State-owned Discos continue to underperform, failing to fulfil regulatory standards for transmission and distribution losses, bill collection, investment, and public safety.
According to the report, the total loss to the national exchequer as a result of inefficiencies and bailouts over the next five years (2016-20) is Rs1.355 trillion. This comprised a Rs647 billion financial loss contributed to circular debt by Discos during a five-year period, as well as a Rs708.4 billion subsidy given out of the federal budget to Discos between 2016 and 2020.
The fundamental cause of inefficiency has been recognised as a delay in structural changes and recurrent government bailouts, which reduces the desire for improvement. Discos incurred a loss of Rs452 billion due to the inability to recover invoiced amounts between 2016 and 2020, while an additional loss of Rs195 billion was incurred due to antiquated transmission and distribution facilities.
The fundamental cause of T&D losses is a lack of proper investment on the part of some Discos, while others spent more than the permitted maximum. The distribution businesses were also found to be in violation of regulatory goals, for which minimal fines were levied, yet disobedience persists. As a result, the government must bail out distribution corporations each year to keep them viable, at a cost of Rs708.4 billion.
According to the research, despite surplus generation capacity, power outages continue to be common in the country, with consumers experiencing average daily loadshedding of more than two hours in some locations. According to the research, over 7.5 million applications for new connections have been made by consumers in the last five years, with about 16% of the applications remaining unresolved.
Source: Submit123News
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