The document discusses three key causes of Pakistan's power crisis: 1) Consumers are unwilling to pay the full economic cost of electricity, despite wanting an end to power cuts. 2) Subsidies disproportionately benefit higher-income households and industries rather than the poor. 3) High administrative and line losses due to theft and inefficiency, which account for billions in lost revenue annually. The National Power Policy aims to address these issues through cost-reflective tariffs, targeted subsidies for the poor only, and increased accountability to curb losses. However, bold reforms are needed to phase out subsidies faster and incentivize performance to truly solve Pakistan's long-standing power issues.
In this presentation I will show you the energy crises in Pakistan, causes and also sources. So please see all the slides and give comments and also subscribe to my youtube channel.
https://www.youtube.com/channel/UC3sdKcmm-Z5pIPSsd_MX78g
In this presentation I will show you the energy crises in Pakistan, causes and also sources. So please see all the slides and give comments and also subscribe to my youtube channel.
https://www.youtube.com/channel/UC3sdKcmm-Z5pIPSsd_MX78g
It's a short overviewic slidemania explaining the energy crisis that has hunted the Pakistan, its causes, consequences, solutions along with energy resources and many more.
It's a short overviewic slidemania explaining the energy crisis that has hunted the Pakistan, its causes, consequences, solutions along with energy resources and many more.
Economy and Energy Security for Pakistan -What lies ahead
The Economic Survey of Pakistan recognizes that during 2012 around 2 percent of gross domestic product (GDP) was lost due to the power sector outages.
The petroleum crude and products contributed to a third of total imports of Pakistan during 2012
The transmission and distribution (T&D) losses were valued at PKR 140 billion in 2012
Issues being currently faced can be categorised into policy, governance, technical and cost issues
Before we kick-off a new line-up of insightful studies and conversations on energy this 2021, we take a snapshot of the previous working papers which were featured last year.
These studies were produced under the Access to Sustainable Energy Programme-Clean Energy Living Laboratories (ASEP-CELLs) project implemented by the Ateneo School of Government (ASOG), and funded by the European Union.
To receive updates on our latest events and publications, please subscribe to our mailing list through this link: http://bit.ly/ASEPCELLsMailingList
ELECTRICITY SUBSIDY AND A JUST ENERGY TRANSITION IN TAMIL NADUAurovilleConsulting
To address climate change, to promote adaptation and resilience, to eliminate energy poverty, and to ensure a just energy transition, countries and states will have to mobilise substantial financial resources. A recent study estimated that India will need to invest a 900 billion USD over the next 30 years to ensure a ‘just energy transition’ (Bushan 2023). While developed countries have pledged to provide climate finance to developing countries, these pledges have not been fulfilled, or are very slow to arrive, or are insufficient. Developing countries will need to find additional and alternative resources to accelerate the decarbonization of its economies and to invest into climate adaptation. The United Nations (2022) has outlined a few interventions that can help in accelerating a just energy transition. These include:
to make renewable energy technologies a public good,
to shift energy subsidies from fossil fuels to renewable energy, and
to triple investments into renewables.
In 2009, G20 members committed to phasing out and rationalizing fossil fuel subsidies in the medium term (Reuters 2009). But as of 2022, fossil fuel subsidies have not been phased out, neither have they been reduced; instead, fossil fuel subsidies exceeded USD 1 trillion globally for the first time. This is largely due to governments’ increased subsidies to cushion consumers from rising energy prices (IISD 2023).
Energy subsidies are found in virtually every country. Justifications for their use range from social welfare protection, job creation, encouragement of renewable energy sources, promotion of economic development, to energy security. However, it may be worth examining some of the current energy subsidy schemes asking if and to what extent these subsidy schemes are contributing to a just energy transition and to what extent these subsidies align with the proposed three interventions by the UN.
Read the full report here: https://www.aurovilleconsulting.com/electricity-subsidy-and-a-just-energy-transition-in-tamil-nadu/
Assessing the Impact of Tamil Nadu’s Electricity Tariff Policy on TANGEDCO’S ...AurovilleConsulting
Electricity consumption is one of the most telling indicators to assess a nation’s economic development. A financially robust and vibrant electricity sector is pivotal for economic growth and is considered vital for a nation’s overall development. Tamil Nadu is one of the states with free electricity for agriculture and electricity tariffs for several other consumer categories such as domestic, huts, etc., are subsidised by the Government of Tamil Nadu. In addition to the electricity subsidy provided by the Government, the state owned electricity utility, TANGEDCO, cross-subsidises the lower consumer tariffs from higher tariffs revenue. However even with the combination of Government of Tamil Nadu subsidies and cross-subsidies, revenue is significantly lower than costs. In 2015-16 TANGEDCO’s cumulative revenue gap was INR 30,884.15 Crore. This paper presents an analysis of the impact of Tamil Nadu’s electricity policies on the financial performance of TANGEDCO.
Why enincon‟s report upon “ Power Distribution Tariffs in India 2018”?
With power distribution reforms gained momentum soon after the application of EA 2003 (where it was believed to be coined in mid 90‟s) , Indian power distribution utilities came along way since then. With, introduction of reforms and multiple cognitive steps undoubtedly the power distribution sector stands improved by leaps from the erstwhile levels. Having said that, it indeed still represents the weakest link of the power generation, transmission and distribution chain
The International Journal of Engineering & Science is aimed at providing a platform for researchers, engineers, scientists, or educators to publish their original research results, to exchange new ideas, to disseminate information in innovative designs, engineering experiences and technological skills. It is also the Journal's objective to promote engineering and technology education. All papers submitted to the Journal will be blind peer-reviewed. Only original articles will be published.
March 2014 Edition of BEACON, A Monthly Newsletter by SIMCON.
Inside this issue:
INDUSTRY ANALYSIS : Power Sector
COMPANY ANALYSIS : Tata Power
Concept of the Month
Quiz
Did You Know?
Energy and Tax Reforms: Household Analysis from PakistanMuhammad Adnan
This paper focuses on the household perceptions across Pakistan regarding the necessary taxation and energy sector reforms. The key objectives are to assess: a) the understanding of respondents regarding challenges and interventions under both reform programmes, and b) willingness to embrace the adjustment that may be required to implement reforms. The survey reached out to 3,800 households in certain districts, including Faisalabad, Hyderabad, Karachi, Multan, Peshawar, Rawalpindi, and Quetta. The timing of this survey is important, as it was carried out immediately after the 2013 general elections. This exercise, therefore, provides a good benchmark against which public expectations from the government can be traced as the tenure proceeds. The findings of this survey shows that, most respondents’ ignorance about tax default results in an increase in fiscal deficit and government borrowing, which in turn create inflation and reduce purchasing power. Also, there is a lack of understanding about the fact that the rootcause of energy crisis is the continuous reliance on subsidies and power theft. This survey also provides two important entry points for the policy makers. First, a significant proportion of population is willing and has ability to pay a) increased taxes if decent utilization of their contributions is demonstrated, and b) higher power bills if given a certainty of reduction in unscheduled power cuts. Second, any painful future adjustment resulting from economic reforms will also require taking in to confidence those segments of population who do not trust the current tax administration machinery and energy sector governance.
This report sheds light on the significance of digital trade integration for Pakistan and selected
Central Asian countries including Afghanistan, Kazakhstan, Tajikistan, and Uzbekistan. Digital trade
integration involves regulatory structures/policy designs, digital technologies, and business
processes along the entire global/regional digital value chain. Digital trade
integration requires free cross-border movement of not only digital products, services, and
technologies but also other manufactured goods, data, capital, talent, and ideas along with the
availability of integrated physical and virtual infrastructure. Hence, digital trade integration requires
the removal of digital trade barriers as well as extensive technology, and legal and policy
coordination between member states.
Countries around the world have actively engaged in establishing new and progressive bilateral and
regional trade agreements to boost trade and economic growth. The significance of digital trade has
increased considerably after the COVID-19 pandemic. Improvement in digital connectivity, ease in
regulations, and skilled workers are key factors to facilitate trade integration and promote the
growth of the e-commerce sector. The report examines the regional trade agreements of Pakistan
and selected Central Asian countries and their relevance for digital trade integration. It also
scrutinizes the challenges faced by the public institutions of Pakistan in the implementation of digital
trade policy. Besides this, the report also observes the challenges faced by SMEs dealing with digital
trade-related products.
The findings show that Pakistan and selected Central Asian countries are at different levels of digital
adoption, including mobile connectivity index and download speed of mobile and broadband.
Kazakhstan and Pakistan have a higher export and import volume compared with other countries.
However, neither country has any major trading partner from the countries selected in this study,
which demonstrates the lack of regional cooperation and the need for regional trade agreements to
boost bilateral and regional trade.
The report discusses the e-commerce laws of Pakistan and selected Central Asian countries, whereas
domestic policies and measures to increase digital trade are also reviewed. The countries are at a
different level in terms of implementing digital trade facilitation measures. Lack of effective
enforcement of intellectual property rights, non-tariff measures, foreign investment restrictions in
digital space, data and information costs, cyber security, and tax policy and administration are all key
policy issues that influence digital trade integration.
The study offers a way forward in which action points are provided for governments, the nongovernmental
sector (notably, business associations and networks), academia and think tanks, and
development partners. #DigitalTradeIntegration
#RegionalTradeAgreements
#EconomicGrowth
#DigitalConnectivity
#EcommerceLaws
The policy brief by the Sustainable Development Policy Institute (SDPI) outlines the urgent need to address the high consumption of Industrially Produced Trans Fatty Acids (iTFA) in Pakistan, which poses significant health risks, particularly in contributing to cardiovascular diseases. Despite being the second-highest per capita consumer of iTFA in the WHO-Eastern Mediterranean Region, Pakistan lacks comprehensive regulations and enforcement mechanisms to mitigate iTFA consumption effectively. The brief recommends a multi-faceted approach involving uniform standards, transparent enforcement, public awareness campaigns, capacity building for regulatory authorities, and collaboration with the food industry to promote healthier alternatives. It highlights the importance of political commitment, intersectoral collaboration, and public-private dialogue to successfully eliminate iTFA from the food supply chain and improve public health outcomes in Pakistan.
In his comprehensive analysis, Vaqar Ahmed highlights the challenges and impediments faced by Pakistan's trade and industrial policies, particularly concerning macroeconomic stability, energy shortages, rising costs, and regulatory constraints. The recent decline in the value of the Pakistani Rupee has further intensified issues for the manufacturing sector. The adverse macroeconomic conditions, including high inflation and a policy rate exceeding 20 percent, have hampered the sector's ability to secure working capital. Large firms' reluctance to operate in special economic zones due to supply-side gaps, coupled with global economic uncertainties, has delayed the next phase of the China Pakistan Economic Corridor (CPEC). Ends with some policy recommendations.
Creating a conducive environment for sustainable economic development, improve living standards for all citizens, and secure a brighter future for the nation.
Highlights the country's large and young labor force, with a 1.94% population growth rate and 65.5 million individuals actively seeking work according to the 2017-18 Labor Force Survey. However, the unemployment rate currently stands at 5.8%, with the highest rate (11.56%) among youth aged 20-24. In response, the government launched the Prime Minister's Kamyab Jawan Programme, allocating Rs 100 billion to support entrepreneurship and create employment opportunities for youth. This program encompasses six key initiatives, including the Youth Entrepreneurship Scheme, Hunermand Pakistan Programme, Green Youth Movement, Startup Pakistan, National Internship, and Jawan Markaz. By focusing on skills development, entrepreneurship, and youth empowerment, the government aims to address unemployment challenges and foster a more vibrant economy.
The Khyber Pakhtunkhwa Urban Policy aims to transform KP's urban centers into engines of social, economic, and cultural growth by promoting vibrant communities, sustainable practices, and economic opportunities. It focuses on inclusive development, infrastructure improvement, efficient governance, environmental protection, and cultural preservation, aiming to make cities globally competitive and provide a high quality of life for all citizens. This policy, reviewed every five years, provides a roadmap for urban development in KP, seeking to create a brighter future for its residents.
This study aims to explain the macroeconomic and welfare impacts of changes in indirect taxes brought about in response to COVID-19. We study whether the tax relief provided for in the federal budget for fiscal year 2020-21 was effective in providing relief to private enterprises and the trade sector. We also study whether production subsidies granted during the first wave of COVID-19 were effectively able to support firms in the agricultural sector. This assessment allows us to draw lessons that may be useful for designing tax benefit policies amid future waves of the pandemic or during other emergency times.
The Government of Pakistan has offered export facilitation schemes
to exporters with the objectives to lower trade costs and expand
output. Currently, nearly one dozen export facilitation schemes are
active. They also include those which are run by the Federal Board
of Revenue (FBR). The question of ‘effectiveness’ of such schemes
in boosting Pakistan’s exports has remained a consistent theme of
interest among policymakers, international development partners
and private sector. This policy brief builds on a firm-level survey,
conducted by the Sustainable Development Policy Institute (SDPI),
and is an attempt to understand the effectiveness, overall gains,
and shortcomings of four major export facilitation schemes offered
by the FBR, including Duty and Tax Remission for Exports (DTRE),
Manufacturing Bond (MB), Export Oriented Unit (EOU) and Export
Facilitation Scheme (EFS). The study aims to provide insights on how
best to improve design of Export Facilitation Scheme 2021, which will
absorb all other schemes by the end of 2023.
The Ministry of Commerce in Pakistan unveiled the National Tariff Policy 2019-24 (NTP 2019-
24) in November 2019. The core aims of the policy were to: i) remove tariff-related
anomalies in the short-term to lower businesses’ cost of inputs and increase their
turnover, ii) increase employment generation in the medium-term, and iii) gain
competitiveness and exports in the long-term.
After its announcement, there remains a need to analyze the effectiveness and
impact of the policy. SDPI team conducted primary research to assess the impact
of tariff policy on Small and Medium Enterprises (SMEs) with the help of a firm-level
survey.
This specific survey aims to bridge the evidence gap by providing an in-depth
analysis on the NTP-2019-24 impact in terms of its three prime objectives. Besides,
the study also attempts to understand the business community’s challenges and
expectations vis-à-vis tariff-related matters.
Digital trade is increasing rapidly throughout the world whereas digital platforms and Coronavirus have further enhanced the importance of the digital economy and digital trade. Countries are focusing on promoting digital trade and integration through various measures including free trade agreements and bilateral negotiations. This study examined digital trade as defined by WTO E-commerce work and USITC. The study included the items that come under the definition of digital trade and examined the digital trade volume of Pakistan from 2010-2020 through three-step methodology. This includes the identification of digital trade items based on Harmonized System at a six-digit level, examining trade volume for digital goods, and identification of top ten export and import items along with top ten markets for digital trade. Favorable government policies and measures have helped Pakistan in promoting digital trade flows. However, there is a need to develop information and communication technology infrastructure in Pakistan to flourish trading activities. Furthermore, Pakistan has to reduce the fiscal and trade barriers such as rules and regulations for foreign investment in digital space, data and information costs, and ensure online security and data protection to promote digital trade integration.
by Asif Javed & Vaqar Ahmed
This study presents a pathway for fostering regional digital trade integration through
South-South and Triangular cooperation. Our main study goals include answering the
following questions:
» What are the challenges faced in the digital trade sector of Afghanistan, Pakistan
and Sri Lanka? How can these be overcome through various cooperative models?
» How can inclusive regional and free trade agreements help to overcome barriers
and enable digital trade integration?
» What can Small and Medium Enterprises (SMEs) dealing with digital trade-related
products learn from literature on South-South and Triangular cooperation?
Suggested citation:
Ahmed, V. and Javed, M. Digital Trade Integration: South-South and Triangular
Cooperation in South Asia (unpublished). South-South Idea Paper Series, United Nations
Office for South-South Cooperation (UNOSSC),Washington D.C.New York, 2022.
Pakistan is facing numerous socioeconomic impacts of the Covid-19 pandemic, including on food security. Food insecurity, which is a long-standing issue, has become more visible since the pandemic. Covid-19 Responses for Equity (CORE) partner the Sustainable Development Policy Institute (SDPI) – a leading policy research thinktank – has been supporting the Government of Pakistan to maintain essential economic activity and protect workers and small producers during the pandemic. One notable contribution has been the development of a Food Security Portal, which is being used by the government to better manage food security in the country. It is the first track and trace system from farm to fork for essential food items.
URI
https://opendocs.ids.ac.uk/opendocs/handle/20.500.12413/17619
Citation
Suleri, A.Q.; Ahmed, V.; Ahmad, S.M.; Shah, Q.; Zahid, J. and Gatellier, K. (2022) Strengthening Food Security in Pakistan During the Covid-19 Pandemic, Covid-19 Responses for Equity (CORE) Stories of Change, Brighton: Institute of Development Studies, DOI: 10.19088/CORE.2022.008
Political and socio-economic discussions in Pakistan’s popular discourse are often inward-looking and generally focus on the country itself, or on its relationships to its immediate neighbors (Afghanistan, India, and China). We suggest here that Pakistan is part of a global system, as well. It is influenced not just by its direct neighbors, but also by: international events (war in Ukraine is just one example); by global economic factors (e.g. oil prices, changing terms of trade, or the danger of a global recession); and by various other global governance arrangements (e.g. Financial Action Taskforce and its demands from Pakistan). At the same time, Pakistan is not insulated from the global systemic changes. The global pandemic has overwhelmed the policymakers with possibilities of future epidemics also not being ruled out. In the past migration of people, both incoming and outgoing, has impacted the social fabric.
Likewise, the country is suffering from global warming and the resulting patterns of weather and precipitation. Pakistan is also a player at the international arena and is expected to play a responsible and proactive role at various global governance forums. The speech of the former Prime Minister of Pakistan at the UN General Assembly on September 27, 2019 has indicated regarding this responsibility and highlighted Pakistan’s role in the Cold War, or the engagement of Pakistani soldiers abroad, either in the United Nations peace keeping framework, or bilaterally. While many Pakistanis are aware of some of Pakistan’s international roles and dependencies, and of Pakistan’s image abroad, there is limited discussion about the country’s global role – what it should be? Who are the internal and external actors that shape Pakistan’s role, engagement, influence, and perception abroad? What role does the state and citizens play in deciding Pakistan’s global role? These are some of the questions that our chapter authors aimed to touch upon in this book. A conscious effort has been made to reach out to Pakistanis living and working abroad. Chapters have been invited from such resource persons who are not only Pakistanis but also study Pakistan from abroad and often through various lens external to Pakistan.
Web: https://pakistan.fes.de/e/global-pakistan-pakistan%CA%BFs-role-in-the-international-system
The Covid-19 pandemic and related
restrictions have had profound
socioeconomic impacts worldwide.
Governments have been faced with
responding urgently to mitigate such
effects, especially for the most
vulnerable. Covid-19 Responses for
Equity (CORE) partner Partnership for
Economic Policy (PEP) – a Southernled
organisation which believes that
evidence produced from an in-country
perspective, by empowered and
engaged local researchers and
policymakers, results in better policy
choices – has been working closely
with policymakers in Pakistan to
assess the Covid-19 impacts and the
effectiveness of current and potential
policies. As a result, PEP has helped
introduce tax reforms for the hardest
hit, agricultural subsidies for farmers,
and the reduction of trade tariffs for
struggling businesses.
Marginalization of Researchers in the Global
South in Global, Regional, and National
Economic-Development Consulting
Authors Ramos E. Mabugu | Vaqar Ahmed | Margaret R Chitiga-Mabugu
| Kehinde O. Omotoso
Date February 2022
Working Paper 2022-05
PEP Working Paper Series
ISSN 2709-7331
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Energy Crisis in Pakistan
1. How to Solve Pakistan’s Power Crisis?
Brief Prepared for Policy Symposium on Energy Reforms in Pakistan
29th November 2013
1
2. The Economic Survey of Pakistan notes
that during 2011-12 around USD 4.8
billion or 2 percent of gross domestic
product (GDP) was lost due to power
sector outages. This is a major factor
behind Pakistan’s disappointing economic
performance over the past 5 years, with
GDP growth averaging under 3 percent
(GoP 2013).
We establish here the unwillingness at
household-level to pay for the power
consumed. Below we exhibit how the
recoveries of some very large DISCOs
have deteriorated over time. Their clients
have not paid for the power consumed. In
Hyderabad, for example, only 60% of the
power supplied in 2012 was paid for – in
a city of over 6.5 million people.
The National Power Policy by the new
government recognises that, in addition
to the direct adverse impact on growth,
the power crisis is bleeding the national
exchequer through still high hidden and
cross subsidies as well as administrative
and line losses (theft). However SDPI’s
household-level survey conducted to
probe people’s willingness to pay higher
tariffs in the wake of power sector
reforms, reveals little understanding of
the causes of the crisis. In this brief we
touch upon 3 such causes, namely:
inability of consumers to understand that
elimination of load-shedding will require
full economic-cost pricing, insistence of
politicians on maintaining untargeted
subsidies (having weak impact for poor),
and inability to stem administrative and
line losses (including theft).
DISCO-wise Revenue Collection
DISCOs
2007-08
2008-09
2010-11
2011-12
PESCO
71%
67%
78%
68%
HESCO
77%
68%
59%
60%
QESCO
86%
80%
41%
36%
Source: DISCOs Performance Statistics Reports 2008-2012
DISCOs are also unable to adopt the
normal commercial practices in other
countries of disconnecting customers for
non-payment
because
of
unclear
legislation and political pressure. To add
to
this,
federal
and
provincial
governments are also power sector
defaulters. Such chronic default by
government
and
non-government
consumers is a major reason behind
recurrence of circular debt.
Will households pay if power cuts are
eliminated and tariff is increased by 10%?
1. Willingness to pay for power
Don't
Know, 6%
The most fundamental principle in
economics is ‘getting prices right’. The
price of a good indicates how much is
consumed (demand) and how much is
produced (supply). When fixing tariffs it
is important that they cover the costs of
generating, transmitting and distributing
electricity. Failure to do so will mean that
generation companies (GENCOs) and
distribution companies (DISCOs) lose
money and go out of business.
Yes,
12%
No , 82%
Source: SDPI Survey Unit 2013
SDPI’s household-level survey results,
(above) reveal little understanding
2
3. among the consumers that tariffs do not
cover costs and that this is the main cause
of power cuts and stoppages. Consumers
want an end to load shedding, but most
say they are not prepared to pay the full
economic cost of producing power.
Subsidy by the government on power consumption (Rs/kW)
LESCO GEPCO FESCO MEPCO HESCO SEPCO QESCO PESCO
1. Residential, <700 units
2. Industrial, (66.132 KV & above) TOU (Peak)
3. Agricultural, 5 KW & above -TOU
(Peak)
0.4
1.4
1.4
2.9
3.9
3.9
1.4
4.4
2.1
2.1
2.1
3.1
6.6
6.6
4.0
7.1
1.5
1.5
1.5
2.5
6.0
6.0
3.5
6.5
Source: Economic Survey of Pakistan, 2013
2. Cost of maintaining subsidies
The table above shows the wide variation
in subsidies across sectors, regions and
consumption levels. Even residential
consumers using above 600 units were
being subsidised in 2012. While the new
government in 2013 has rationalized
subsidies, we argue below that the
current subsidies are still more than the
global norm of 100 units for a lifeline
block.
The fundamental rationale for subsidising
electricity tariffs is to augment the paying
capacity of the poorest of poor. However
once subsidies are provided across the
board, people start to demand them as
their right and politicians feel compelled
to maintain this distortive fiscal burden to
win popularity.
Bulk , 0.9%
Others,
4.3%
Domesticlifeline (1100), 0.3%
Domestic
(1-100),
11.1%
Since 2005 the typical politician’s
response to the power deficit has been to
keep subsidising expenditures and not
risk political office by transmitting full
economic cost to consumers. Both power
deficits and subsidies have grown in a
similar pattern. Suppressed tariffs meant
operators had insufficient funds (or
incentive) to fully utilize existing capacity
or adopt cheaper sources of generation.
Industrial,
5.9%
Agriculture,
25.1%
Domestic
Others,
7.7%
Domestic
(101-300),
38.5%
Subsidy Outlay 2012
7000
Power Deficit & Subsidies
6000
Deficit (MW)
Source: Planning Commission of Pakistan, 2012
The above chart illustrates the
contradiction between the rationale for
subsidies and actual practice. Only 0.3%
of subsidies in 2012 went to the poorest
consumers, those using less than 100
units a month. There is no economic or
social logic for subsidising the other
consumer categories.
500
400
5000
4000
300
3000
200
2000
100
1000
0
Subsidy (PKR Billion)
Commercial
, 6.1%
0
2005 2006 2007 2008 2009 2010 2011 2012 2013
Electricity Shortfall (MW)
Subsidy to Power Sector
Source: NEPRA and Planning Commission of Pakistan 2013
There has also been a lack of
transparency in subsidy allocation and
tariff setting. Most prices are determined
3
4. by supply and demand in competitive
markets. However, where markets are
uncompetitive government regulation
may be needed. Since Pakistan’s DISCOs
are monopoly suppliers in their regional
markets, NEPRA was established to
ensure monopolies are not abused.
NEPRA officials’ autonomy has been
breached on several occasions. Most
notable was the intervention by the
Judicial authorities which ended up
carving out their own role in 2012 and
intervened with orders that hampered
implementation of NEPRA orders.
in line losses and power theft. Until
August 23,770 cases of theft were
registered and under trial, but only 3
cases were punished. Moreover, the fine
imposed was under PKR 5,000 in each
case.
The above clearly indicates lacunae in the
accountability mechanism. This requires
amendments in Pakistan Penal Code so
that there is certainty of effective
punishment in cases of energy theft.
SDPI’s firm-level survey conducted in
major business centres of 4 provinces
indicates that the power sector defaulters
are well known even in their own
communities. Yet they are never reported,
as there is a strong perception that there
will be no effective trial on such instances
of crime.
3. Administrative and Line Losses
It is unthinkable that responsible
governments let incidents of theft and
efficiency
losses
in
generation,
transmission and distribution (T&D) pass
so easily.
Do you know of power theft in your area?
Power T & D Losses (% of output)
40
59%
Percentage
30
35%
20
6%
10
Yes
No
Don't Know
Source: SDPI Survey Unit 2013
Pakistan
Bangladesh
Nepal
2010
2007
2004
2001
1998
1995
1992
1989
1986
1983
1980
1977
1974
1971
0
4. Hopes from National Power
Policy
Sri Lanka
Source: World Development Indicators 2013
The T&D losses in Pakistan are higher
than 117 countries in the world. The
world average is 8.8% while in Pakistan
these losses stand at 25%.
While the National Power Policy promises
a plethora of reforms aimed at
strengthening efficiency, competitiveness
and sustainability – addressing the above
3 fundamental causes of the energy crisis
is of foremost importance.
In August 2013, the Secretary of Water
and Power Ministry informed the Senate
Standing Committee that Pakistan loses
annually PKR 150 billion (USD 1.7 billion)
Tariffs and subsidies: the draft policy
recognizes that subsidies should only
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5. benefit the poorest of the poor. The
definition of a poor consumer is someone
utilizing less than 200 units of electricity
a month. Globally, ‘lifeline blocks’ are
typically no more than 100 units a month.
We believe that the current ceiling is still
high and should be lowered. Similarly,
there is no justification for subsidising
commercial, industrial and bulk users.
The policy aims to phase out subsidies
over 3 years. Given the heavy fiscal cost of
subsidies we recommend that all
subsidies (including hidden and cross
subsidies) - except perhaps a 100 unit
lifeline block - should be phased out over
the next 24 months.
increasing accountability of heads of
DISCOs. It is further recommended that
such contracts should have specific
clauses on reduction in distribution losses
and full collection of receivables from
consumers.
Competing for fuel allocation: The
allocation of fuel to GENCOs should be
linked with their efficiency levels. If the
Independent Power Producers (IPPs) are
better performing in efficiency terms then
IPPs should get preference over GENCOs
in fuel allocation. According to Ministry of
Water and Power’s own estimates a
4000mtoe shift from GENCOs to IPPs will
save PKR 77 billion annually. Whereas
GENCOs spend PKR 13 billion per month
to generate 650 MW, IPPs spend only
PKR 10 million per month to generate
1150 MW.
It is important to understand the
incentives of buyers and sellers. A much
more effective method of protecting the
poor than subsidizing items like
electricity and wheat – without distorting
market functioning – is to provide them
(and only them) with cash transfers. Wellfunctioning targeting mechanisms have
already been developed through Benazir
Income Support Program (poverty
scorecard database).
5. Conclusion
The main objective of this policy brief is
to highlight the link between lower than
economic-cost tariffs and load shedding.
If tariffs do not cover GENCOs’ operating
costs they are unable to buy sufficient
fuel. This is why many power stations are
operating below capacity. To eliminate
load shedding Pakistan needs not only to
increase utilisation of existing capacity,
but also substantial investment in new
capacity. However, investors require
tariffs high enough to cover both
operating and capital costs, i.e. including a
return on capital invested. There has been
minimal investment in recent years
because tariffs have been too low to cover
operating, let alone capital, costs. With
growing demand this has meant an
inevitable increase in load shedding. The
only way to eliminate load shedding in
the short to medium term is by increasing
Curbing theft: Unaccounted-for-gas
controls should be enforced and the saved
gas diverted to the power sector. The
policy notes that just a 10 percent
diversion can produce an extra 2000MW.
Current transmission losses of 3.6 percent
are higher than the NEPRA allowed losses
of 2.5 percent. This immediately calls for
introducing
performance
contracts
(clearly mentioning targets for reduction
in losses) for grid stations under National
Transmission and Dispatch Company.
At the DISCOs level as well the power
policy aims for a similar mechanism of
performance
contracts
aimed
at
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6. tariffs.
Once
consumers
understand
that
artificially suppressing tariffs is largely
responsible for load shedding, it should
become easier for
the
political
representatives to take the difficult
decision to reduce untargeted subsidies
and pass on the full cost of supplying
power to consumers. Finally, these
political representatives will also need to
assert themselves and confront the power
sector defaulters and crackdown on theft
that is resulting in losses well above
international norms.
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