Key Takeaways:
- Circular debt in Pakistan’s power sector has reached Rs2.655 trillion as of May 2024.
- The Cabinet Committee on Energy (CCoE) has approved measures to enhance the efficiency of electricity distribution companies.
- An incentive package for recovering unpaid electricity bills has been sanctioned.
Escalating Circular Debt
The Cabinet Committee on Energy (CCoE) reported that the circular debt within Pakistan’s power sector had climbed to Rs2.655 trillion by May 2024. This figure highlights the ongoing financial challenges in managing the country’s electricity supply and payment system.
Initiatives to Improve Distribution Efficiency
Chaired by Prime Minister Shehbaz Sharif, the CCoE meeting resulted in the approval of a support unit aimed at enhancing the efficiency of distribution companies (DISCOs). The initial focus will be on the Multan Electric Power Company, with a goal to reduce electricity theft and ensure timely bill collection.
This support unit is expected to implement strategies that will streamline operations, thereby reducing losses and improving the financial health of DISCOs.
Incentive Package for Bill Recovery
To address the issue of unpaid and overdue electricity bills, the CCoE has sanctioned an incentive package. This scheme will reward workers of DISCOs and law enforcement agencies for successful bill recoveries. This move aims to motivate those involved in the collection process, thereby increasing the recovery rate of outstanding payments.
Encouraging Private Investment
In a bid to foster private investment in the power sector, the committee approved the Standardized Security Package Document under the Power Policy 2015. This document is designed to expedite the resolution of tariff and related issues for small private sector water projects. By providing a standardized framework, the government aims to attract more private sector participation, thereby increasing investment and enhancing the sector’s overall efficiency.
Extension of Refinery Policy 2023
The CCoE also decided to extend the Refinery Policy 2023 by six months. This extension is focused on upgrading the country’s existing oil refineries. The Ministry of Petroleum has been directed to work closely with these refineries to develop a comprehensive plan for modernization. This initiative is expected to improve the operational efficiency and output quality of Pakistan’s oil refineries.
Addressing Energy Challenges in Gilgit-Baltistan
In response to the ongoing energy challenges in Gilgit-Baltistan, Prime Minister Sharif has established a committee to draft a plan for ensuring uninterrupted electricity supply in the region. This committee is tasked with developing strategies to overcome the unique energy challenges faced by Gilgit-Baltistan, aiming to provide a stable and reliable electricity supply to its residents.
Comprehensive Debt Report
A detailed report on the electricity sector’s debt from July 2023 to May 2024 was presented during the meeting. This report provided a comprehensive overview of the debt situation, highlighting the key areas of concern and the measures needed to address them.
By implementing these initiatives, the CCoE aims to tackle the pressing issues within Pakistan’s power sector, reduce circular debt, and enhance overall efficiency. The government’s efforts are directed towards creating a sustainable and financially stable power sector, which is crucial for the country’s economic growth and development.
