Power sector reforms

Editorial

PRIME MINISTER Nawaz Sharif has promised to bridge the electricity supply gaps in the country in the next two and a half years and add 21,000MW of new power to the national grid over eight years. Both are difficult targets Mr Sharif has set for himself. He, however, seems to have been encouraged by an earlier-than-scheduled commissioning of the two gas turbines at the Guddu thermal power project and the inauguration of the Uch project-II this week.

The expansion of the Guddu project has already added 486MW to the national grid, and the completion of the third turbine next month will take new generation from the project to 747MW. The Uch project will add another 404MW to the system. At the same time, work on several hydel and thermal power projects has already been initiated with financial assistance from multilateral and bilateral donors as well as Chinese and domestic investors.

The completion of these projects will certainly mitigate the pain of industrial and domestic consumers who are suffering from long power cuts despite paying a price said to be the highest in the region. Indeed, the Nawaz Sharif government is more focused on removing the electricity supply gaps than its predecessor. Even a partial success in implementing the proposed projects will significantly bring down the duration of the power cuts by the end of its term in 2018.

But the focus on new generation is not enough. The government should also be implementing the required power sector reforms that it had promised in its energy policy last year. For example, the government has so far done little to check power theft, reduce transmission and distribution losses and recover unpaid bills from public and private defaulters.

Nothing has been done to improve the management of or stop rampant corruption in public-sector power companies. Consequently, we are seeing a fresh build-up of the inter-corporate power sector debt of slightly less than Rs300bn in nine months after having retired the previous one of Rs480bn last June.

The economy and consumers may continue to suffer power cuts and pay a high price for a much longer period than the one stated by Mr Sharif unless governance reforms are implemented in the energy sector.