| Abstrakt: |
Pakistan's energy sector is facing a deep crisis, characterized by perpetual circular debt, ill-conceived independent power producer contracts, and outdated tariff design. This has led to power outages, unreliable supplies, rising tariffs, overreliance on non-renewable energy sources, and import dependency. The mismanagement and misguided decision-making of the past have contributed to this situation, with poor consumers bearing the brunt of the failures. The power distribution companies are heavily influenced by centralized management, and the circular debt has reached Rs2.6 trillion. Electricity theft is a problem, but it is not the sole cause of the financial mess. The decline in electricity demand, attributed to factors such as load shedding and the shift to rooftop solar, has further impacted the financials of distribution companies. The underutilization of expensive installed generation capacity and the lack of long-term planning have also contributed to the financial challenges. The tariff design, with cross-subsidies and taxes, increases the financial burden on consumers. The article suggests revising the tariff design, promoting winter electricity consumption through seasonal tariffs, and establishing an independent power commission to address the crisis. Additionally, the government is considering a $1.3 billion investment from the United Arab Emirates to establish a hydrocracker unit. It is estimated that Rs40 billion worth of gas is stolen from the gas companies' systems, exacerbating the circular debt in the gas sector. [Extracted from the article] |
