Islamabad:
The finance ministry has not backed a formal proposal to appoint senior officers of the armed forces as heads of new Performance Management Units (PMUs) in the rotten electricity distribution companies to improve their management.
However, the finance ministry backed the Special Investment Facilitation Council’s (SIFC) initial decision to give the armed forces a role in an ongoing campaign against electricity theft.
A senior power ministry official said a few days ago that the military also does not want a role in the management of electricity distribution companies and the proposal was tabled by the power ministry for the involvement of the armed forces.
The proposal to set up new PMUs and appoint senior army officers as heads had not been made by the SIFC. It was probably the idea of the Department of Energy, which the Treasury did not support.
Sources at the Ministry of Energy said The Express Tribune that the Ministry of Finance did not support its brief to the federal cabinet to hand over the management of electricity distribution companies to the military, police and intelligence services.
The energy ministry wanted to create new PMUs in distribution companies under the command of brigadier generals.
Energy ministry sources said the finance ministry termed the proposal in violation of a SIFC decision that had approved giving the military a role only to the extent of an anti-theft campaign.
Despite repeated attempts, Finance Ministry spokesman Qamar Abbasi did not respond to questions about the ministry’s position on the army’s involvement.
In a brief prepared for the federal cabinet, the Electricity department has suggested that new PMUs be set up in all electricity distribution companies and a rank 20 officer of the armed forces head these units.
He proposed to start a pilot project in the Hyderabad Electricity Supply Company (HESCO) under the command of a brigadier general who would report directly to the federal secretary, Rashid Langrial. According to the proposal, the unit will also consist of officers from Pakistan Administrative Service (PAS), FIA and intelligence agencies.
The brief also called for the deputation of the senior army officer along with his team and allied staff to strengthen the management of each DISCO. He also asked the Ministry of Defense to post an officer from sensitive services in each DISCO.
The Cabinet’s nod was also sought for deputing a serving police officer of BS-18 in each electricity distribution company to coordinate with the police authorities in the anti-theft campaign.
However, the sources said that the finance ministry has completely opposed the involvement of the army in the management of electricity distribution companies as no such proposal was given by the SIFC.
The finance ministry was of the view that the SIFC had decided that a special anti-theft task force should be attached to the electricity distribution companies and there was no decision on the new PMUs.
The finance ministry has also raised questions about the additional cost of setting up these management units that the collapsing power sector will have to bear. Concerns were also raised about the lack of experience in managing the electricity sector.
The transitional government had launched a campaign against electricity theft. Secretary Power said on Monday that savings of Rs 63.6 billion have been secured so far under the anti-theft drive, including Rs 51.1 billion in cash recoveries.
However, the Debt Circular Report for October 2023 revealed that the performance of electricity distribution companies deteriorated further in the first four months of the current financial year.
The power sector’s revolving debt jumped from Rs 2.310 trillion in June to Rs 2.61 trillion in October – a net increase of Rs 301 billion in just four months. Of the increase of Rs 301 billion, an amount of Rs 242 billion or 80% of the additionality, is due to inefficiencies and lower recovery of bills by these electricity distribution companies.
Losses due to “inefficiency” were Rs 77 billion in just four months. Similarly, these distribution companies collected Rs 165 billion less in electricity bills in just four months.
The power minister’s presentation this week also revealed that honest electricity consumers were robbed of Rs 675 billion.
The additional amount is collected through overcharging and charging them higher than the cost of production to pay the subsidies to other consumers.
The Department of Electricity has admitted that previous efforts to appoint talented CEOs of these power distribution companies have failed and as a result, the power sector is mired in inefficiency.
Electricity distribution companies have also failed to recover Rs 1.8 trillion from consumers and the government has now launched the anti-theft campaign. The power ministry has estimated that these power distribution companies are expected to make another loss of Rs 589 billion in this financial year due to less bill recoveries and electricity theft.
He admitted that there was rampant mismanagement in the electricity sector. the whole process for further reforms has been derailed.
The power ministry feared that weak leadership in these power distribution companies may also derail the anti-theft campaign.
The power ministry said the Hyderabad, Sukkur, Peshawar and Quetta power distribution companies are facing severe capacity constraints and require administrative assistance.
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