WB paints gloomy picture of Pakistan power sector: The News

By Ansar Abbasi

ISLAMABAD: The World Bank presents an extremely gloomy picture of Pakistan’s power sector that is marred by corruption and inefficiency but sells electricity to the public for a price that is 60 per cent higher than that of India and 40 per cent more than that of Bangladesh.

A draft report on “Pakistan’s Investment Climate” issued in March this year by the World Bank reveals that Pakistan has become the worst performer in the world after Egypt in respect to the waiting period for a new connection. Regarding massive corruption in the provision of electricity connections, the report disclosed: “A stunning 84 per cent of firms that applied for connection had to make informal payments in order to obtain electricity services.”

The governmentís claims and the ever-increasing loadshedding apart, the Bank says with only about 65 per cent of Pakistan’s population having access to grid-connected electricity, poor access to power has assumed serious dimensions, justifying firm perceptions that electricity is the most important impediment to growth.

Instead of taking remedial measures and keeping its own house in order, the National Electric Power Regulatory Authority (Nepra) is poised to hit the consumers with another increase. The decision has, however, been put on hold following the Supreme Court’s intervention. The court seeks review of the decision, which, according to a source, the Nepra had taken without following the laid-down procedures for tariff determination.

The WB draft report presents a sorry picture of power sector reforms and the inadequacy of regulation in enforcing efficiency by the Nepra despite being in formal existence since 1997. The Nepra law required a regulatory framework of which 90 per cent has not been put in place by it despite the Nepra law stipulation to issue these rules within 18 months.

Some interesting portions of the World Bank report are reproduced as below:

Electricity price: The price of electricity is on the higher side relative to other South Asian countries. Even with the subsidies, system losses and supply quality problems, electricity tariffs in Pakistan are 60 per cent higher than in India and about 40 per cent higher than in Bangladesh.

Losses: Technical and collection losses impose a severe strain on the financial sustainability of Pakistan’s power sector. The country’s electricity system loses more power than all comparators, apart from India, which lost a quarter of its generated electricity in 2006/07.

Access to power: Access to power supply is a serious challenge for firms although the pattern differs across location, type and size.

Delays in getting electricity connections have become worse for firms and this barrier to entry and constraint on expansion. The waiting period for a new connection went up to from around 37 to 41 days from 1999-2002. The average waiting period in 2006 deteriorated to 92 days, placing Pakistan among the worst performers in the world, second only to Egypt amongst its comparators.

Corruption in the electricity sector: In addition to technical issues, other factors impede low-cost access to power supply. A stunning 84 per cent of the firms that applied for connection had to make informal payments in order to obtain electricity services — a startling increase from the 25 per cent firms that reported making such payments in 2002.

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