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Power struggle

Khyber-Pakhtunkhwa and Centre seem diametrically opposed to each other over transfer of PESCO

Power struggle

With Prime Minister Nawaz Sharif’s decision to give only the administrative control of Peshawar Electricity Supply Corporation (PESCO) to Khyber-Pakhtunkhwa for bill distribution and recovery, it seems the transfer is highly unlikely. Both the sides are diametrically opposed to each other. While the federal government wants to shift as quickly the toughest task of controlling the power theft and collecting of bills to KP, the latter is in no mood to work only as a ‘meter reader’ and insists on full control of power generation.

While Prime Minister Nawaz Sharif sanctioned transfer of only administrative control of PESCO, KP sought the handover of all power sector assets, including PESCO, along with the necessary paraphernalia. The province requested that as the central power system had failed to deliver, control of all the three elements of generation, distribution and transmission be given to the province through an all encompassing package deal.

When the Pakistan Tehreek-i-Insaf chief Imran Khan, severely criticising acute loadshedding and terming it a result of the mismanagement of PESCO by federal government, asked for its handover to KP for its ‘efficient running’, he failed to realise that PESCO is one of the 11 power distribution companies (Discos) which only own and maintain power distribution systems in the country. For its poor bill collection and huge losses, second worst after the Quetta Electricity Supply Company, the federal government readily agreed to its transfer to KP.

The PTI spokesman Asad Umar accepted the offer and even asked for devolving all the other federal entities in the province to his government which it had failed to run efficiently. However, KP Chief Minister Khattak later spelled out his 11 conditions for the transfer.

In his letter to the prime minister, Khattak asked for control of power generation, operation and distribution system and a PESCO free of liabilities/debts with a clean balance sheet. “The federal government should own and finance PESCO line-losses for at least five years, supply 1000MW from thermal power stations for seven years in winter and additional 200MMCFD gas to KP so that gas-power stations are established. All necessary measures must be taken to improve plant and capacity factors of generation facilities. The federal government will continue all ongoing power system extension programmes as per original plan and sources of funding. It will also have to address the inequitable power investment in KP through compensatory allocation for next five years and will also have to pay the net hydel profit arrears. KP would select the best from the existing PESCO staff and the rest would have to be absorbed in federal entities,” he wrote.

Senator Haji Muhammad Adeel, former KP finance minister and the acting president of the Awami National Party, said it was a wrong and unwarranted demand on part of Imran Khan. “The KP Assembly had asked for handing over to KP of power generation, distribution and transmission facilities located in the province. The PTI government has now understood the point which explains why they have come up with the demand of full control of power generation as well,” he says.

KP residents believe they produce surplus electricity but are unjustly made to pay higher prices and subjected to lengthy hours of loadshedding.

“The federal government must handover complete control of power generation resources in the province and not merely authority for bill collection. Punjab grows wheat, fulfils its needs first, provides it cheaper to its people and only sells the surplus. Similarly, KP should have the authority on its electricity generation resources. We should be given our ‘cow’ rather than making us to buy its ‘milk’ on higher rates,” Senator Adeel said.

To a question, Adeel said that the federal government must own the PESCO losses and liabilities as these were incurred when it had its control. KP should be responsible for PESCO’s losses, debts, repairs and development expenditure after it gets its control. The federal government should also pay KP hundreds of billions of dues in electricity tariff differentials and net hydel profit arrears.”

But the million dollar question is: Does the PTI government have the money, human resource and resolve and capacity to run it efficiently?

The transfer has several implications and involves complex issues.

PESCO only owns and maintains the power distribution system in KP. It also owns grid stations, transmission lines, sub-transmission lines and transformers. But since the KP government demands control of the three components of generation, distribution and transmission, it becomes a complex phenomenon involving several other federal entities.

All the power generation facilities are under Pakistan Electric Power Company (PEPCO). Power tariff is determined by National Electric Power Regulatory Authority (NEPRA) on behalf of all Discos while power is purchased by the Central Power Purchase Agency (CPPA). National Transmission and Despatch Company (NTDC) is the system operator for generation facilities. The list is endless. Will the federal government also devolve the powers of these entities to KP as well? It is precisely what the KP CM referred to when he asked for necessary legislation and amendments in the statutory framework and KP exemption from NEPRA’s regulatory regime.

The issue has implications for both the sides. While the federal government believes the 18th Amendment allows PESCO’s handover to KP, some argue it is a dangerous trend and could lead to more such demands by other provinces. Reportedly, Sindh has already demanded control of production and distribution of electricity in the province. Others could follow suit for other departments and entities.

With high line-losses (58 per cent against the national average of 18 per cent), rampant power theft and poor recovery ratio and age-old transmission lines, the PTI knows it will only be making itself the target of public wrath if it agrees to only administrative control of PESCO.

Bill collection is the biggest challenge for the under-funded PESCO. KP could do it better as it knows the area and its people well. By employing latest technology, it could improve PESCO performance, reduce line losses and curb theft which could help decrease tariff for consumers. If the PTI succeeds, it will get the much needed fillip. But if it fails to deliver, it will have to incur the masses’ wrath for each power tariff hike and loadshedding.

It is also pertinent to state that Article 157 of the Constitution clearly empowers the provinces to construct power houses/grid stations, lay distribution and transmission lines for use in the province and levy taxes on and determine tariff for distribution of electricity and approach the Council of Common Interests in case of any dispute. Provinces, therefore, are entitled to have control of power sector.

Analysts say the PTI, as usual, is indulging itself in grievance politics. The PTI manifesto had pledged, inter alia, improvement of economy through reforms in energy sector. They say it could curb theft and improve recovery which could decrease power tariff.

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