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Govt aims to produce 4,997MW in 18 months

The government has targeted a total electricity addition of 4,997MW in the next 18 months that would be achieved through clearing the circular debt, increase energy efficiency and new additions.

According to Riaz-ul-Hasan, Director to Federal Finance Minister, 2,000MW would be added to the system through clearing the circular debt, 1,000MW through increasing energy efficiency and 1,997MW would be the new additions.

The new additions would include 425MW from Nandipur plant, 525MW from Chichoki Malian plant, 747MW from Guddu and 300MW from Larkana.Hasan said that the government has initiated structural reforms in the power sector under the Power Sector Reform Plan 2010, finalised by the Cabinet Committee on Restructuring (CCoR).

Implementation of Power Sector Reform Plan 2010 has been expedited and upgraded under the Power Sector Recovery Plan 2011 headed by Dr Abdul Hafeez Sheikh, federal finance minister.

The plans are based on six key pillars, including improved governance structure; supportive legal framework; financial sustainability; supply side management; demand side management and promotion of the private sector participation in the sector.

Giving the details of improved governance structure, he said, the boards of directors of all nine distribution companies (DISCOs) and the National Transmission & Dispatch Company (NTDC) had been reconstituted.

Business plans developed by DISCOs and GENCOs are being implemented, while strengthening of the Ministry of Water and Power was underway through creation of the Power Directorate and initiating consultant support.

He also said that cumulative increase in the tariff of 90 percent since March 2008, including 15.6 percent increase in 2011 monthly fuel adjustments was being passed on to the consumers.

“Tariff differential between the National Electric Power Regulatory Authority (NEPRA) determined and notified tariff, which stood at Rs3.25 per unit in 2010 has come down to Rs1.26 per unit,” said Hasan.

The timely payment of tariff differential subsidy was being ensured along with the subsidies for Karachi Electric Supply Company (KESC) and the Federally-administered Tribal Areas (FATA) on a monthly basis.

“All subsidy claims of Rs56 billion till December 2011 have been disbursed. The government started fiscal year 2012 with no outstanding claims of tariff differential subsidy against any power sector company. For the year, overall subsidy is estimated to be Rs91-125 billion.”

About the circular debt, he said, the recovery of receivables of DISCOs of Rs348 billion is essential to clear the circular debt against payables of Rs423 billion. “Debt swap of Rs150 billion is being done to cover the sizeable proportion of the circular debt.”

“Besides, efforts for 100 percent recovery of the current bills are underway along with the disconnection of defaulters after 45 days that has been reduced from 90 days, without any exemption or discrimination,” said Hasan.

As many as 3,334MW had been added since 2008. Most efficient plants are being dispatched to maintain the 92TWh generations, he said.

As part of reforms, loss-mapping in each DISCO is in progress to exactly pinpoint the losses and their sources to achieve the target of 18.7 percent losses in the current fiscal year, said Hassan.

The load management and conservation measures to save around 1,000MW are put in place, he said, adding that in order to promote the private sector participation in the sector, expressions of interest (EoIs) for the private bidders were issued for overhaul and maintenance (O&M) contracting for GENCOs. The government is in the process of finalising O&M contracting wherever required for DISCOs, he said.

Hasan said that the government aims at reaching full cost recovery by 2013 by removing anomalies in tariff and minimising cross subsidy.

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