ISLAMABAD: The federal cabinet again approved on Wednesday a formula to resolve the energy crisis that has failed earlier — two weekly days off, business closure at sunset and staggering of industrial holidays — to overcome increasing electricity shortfall during peak hours.
And surprisingly, the decision was taken this time without the consent of the provinces and without even consulting them.
The chief ministers were not invited to the meeting although the decision cannot be implemented without their active cooperation.
In fact, Punjab and Khyber Pakhtunkhwa publicly criticised the decision immediately after it was reported by the media.
And because the other stakeholders, the commerce and industries sector, had also not been taken on board, representatives of traders and industries expressed their displeasure and said the move would adversely affect businesses and industries.
Water and Power Minister Syed Naveed Qamar said the meeting presided over by Prime Minister Yousuf Raza Gilani had decided that provinces would be consulted for implementation of the decision on energy conservation because they had to play a central role in enforcement of business closure after sunset.
He said some designated branches of banks would be allowed to operate on Saturdays to address practical business problems.
The cabinet did not take a decision on a proposal to increase electricity tariff by 12 per cent because of paucity of time, and decided to address financial aspects of the restructuring of circular debt and related matters in its next meeting.
The meeting decided to disconnect power supply to defaulting consumers 45 days after non-payment of bills even if these included ‘sensitive’ connections.
“The cabinet decided to disconnect electricity without discrimination to those who fail to pay their bills, whether he/she is the president, the prime minister, chief of army staff, the provincial governments or any other government institution,” Finance Minister Dr Hafeez Shaikh told journalists after the meeting.
He said all institutions were given a budget every year and it was their responsibility to pay their power bills with responsibility, he said, adding the government was serious and firm in implementing the decision indiscriminately because it had injected around Rs1 trillion in the power sector over the past three years and yet unpaid electricity bills stood at about Rs300 billion.
Mr Naveed Qamar said the cabinet had also decided to do away with the current tariff setting mechanism under which the National Electric Power Regulatory Authority (Nepra) fixed different tariffs for distribution companies of Wapda, resulting in tariff differential subsidy in hundreds of billions of rupees because of equalised and uniform tariff for the entire country.
He said from now onwards, a single tariff application would be filed before Nepra which would determine a uniform tariff.
Nepra will also be revamped and strengthened.
Dr Shaikh said the government decided to involve the private sector in billing, metering and collection of electricity bills to improve overall recovery because the public sector had failed to deliver.
The cabinet agreed to privatise the Islamabad and Faisalabad electric supply companies, which were the best distribution companies in the country, he added.
The ministers sidestepped questions why reform measures introduced almost a decade ago for transparent electricity costs were being reversed and whether it was an attempt to camouflage increasing system losses of distribution companies in Sindh, Balochistan and Fata.
An official, however, explained that the separate tariffs were premised on continuation of a set of reform measures, including privatisation of these entities which could not be done.
Dr Shaikh did not answer a question about quantifying the cost of bad governance and delayed decision-making, but an official said the Rs1 trillion the minister talked about having injected into the power sector could be attributed to these factors. The amount would have been enough to construct Diamer-Bhasha dam and Munda dam, generating a surplus electricity of about 8,000MW.
Mr Qamar said Pepco – looking after 14 distribution, generation and transmission companies of Wapda – would be abolished in a few days and corporate entities would be made fully independent through professional managements and a private sector board so that they did not look towards the federal government for bailouts.
The management contracts would be signed with new chief executive officers and chief financial officers with specific targets and performance rewards. He said the cabinet had decided to double security deposit for new connections and for reconnections after disconnection owing to default. Life-line consumers using 100 units a month will be exempt from the increase in deposit.
The minister for power said efforts would be made to ensure full recovery of outstanding dues within six months.
Simultaneously, special concessions on power tariffs to Azad Kashmir and Balochistan would be gradually eliminated in consultation with the respective governments. In Balochistan, all agricultural tube-wells would be brought on metres to quantify their consumption so that the government could provide a flat amount of subsidy, instead of applying un-metered flat rates.
He said billboards and neon-signs would not be provided electricity after sunset.
He said it had been proposed to close down wedding halls across the country after 10pm. About 30 million energy-saving bulbs have been procured with the assistance of the Asian Development Bank and their free distribution would be completed by June next year. Also, the ongoing power projects would be fast-tracked to be completed in 18 months, he said.
Mr Qamar said the measures would reduce the demand-supply gap to a manageable level.
Dr Shaikh said the cabinet had also decided to refund to power companies Rs10 billion the Federal Board of Revenue had collected as general sales tax on unpaid electricity bills.
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