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Electricity infrastructure: losses out of proportion

Is there an industry where more than 40 per cent of the produce does not get accounted or paid for? The answer is the Pakistan’s energy sector.

It is truly a bizarre scenario and completely inexplicable for certain distribution companies (DISCOs) in the country where losses top more than 40 per cent. Generally, transmission and distribution (T&D) losses account for 20 per cent for developing countries on account of far-flung rural areas, poor system maintenance and depleted operational features of electricity infrastructure.

However, 40 per cent T&D loss implies collusion among employees of DISCOs with provincial governments and the general public (both small and large customers alike) to prevent company operations taking place efficiently and competently.

The consequence is often times a burden on honest law abiding citizens who pay their electricity bills on time, but worst, bears the burden of un-accounted pilferage as well. Such losses are then transferred to future generations as they must bear the additional liability, conceivably through sustained rise in electricity prices.

Among the main culprits, Hyderabad Electric Supply Corporation or HESCO tops the list with distribution losses of 40 per cent followed by Peshawar Electric Supply Corporation or PESCO with losses of 36 per cent and Quetta Electric Supply Corporation’s losses of 20 per cent. The entire scenario is shocking as it represents mass corruption in our society right from the top political brass of the province to the common man. Even more distressing is the poor collection of electricity bills. It is generally estimated that Rs90 billion is due from provincial governments alone whereas certain powerful groups and individuals, in collusion with WAPDA, owe more than Rs120 billion without being penalised.

Reforms in the distribution sector will be critical in order for the industry to survive. This would require distribution to be depoliticised with an aggressive strategy to penalise those involved in power theft and pilferage.

Moreover, undertaking country wide disconnection of lines for non-payment of electricity bills has to be pursued without discrimination.

The subsidy component has to be partially invested in upgrading the network and improving the operational fleet. Most importantly, the distribution companies need to be privatised, giving open access to bulk consumers (industries and large corporates) to buy power directly from the generating companies instead of buying it from distribution companies.

Distribution companies will get their rent of providing infrastructure facilities to customers but customer and generating company can directly negotiate the price of power with each other.

Such a model is widely practised in the developed world and has resulted in huge efficiency gains for the entire electricity infrastructure but has not been put to practice in Pakistan, as the government machinery has to start paying for their own electricity bills, a certain loss in privilege.

Our government will only wake up to the crisis when it will be asked to observe five minutes of load shedding for every 100 minutes of load shedding suffered by ordinary citizens.


Delaware, US

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