Pakistan's Power Revenue Crisis

The increasing popularity of off-grid residential and commercial solar power systems has the government panicking about meeting contractually obligated payments for power producers.

Pakistan's Power Revenue Crisis

“The future is green energy, sustainability, renewable energy.”—Arnold Schwarzenegger

Who can refute the fact that electric power can now be included in the category of fundamental rights of modern human beings. With a heavy reliance on innumerable gadgets on electricity, there is a constant need for an uninterrupted supply of power. From preservation of food to lifesaving equipment, from controlling temperatures in buildings to protecting assets and maintaining security, electricity plays the most pivotal role. It has become the oxygen for inanimate objects where any interruption can cause permanent damage.

Under the constitutional contract between a state and its subjects, wherein citizens are supposed to commit their loyalty, the state in return is duty bound to facilitate them with all the necessary essentials of life, a few of which are free while others are on the condition of compensation as elaborated in Ms. Shela Zia and Others v WAPDA [PLD 1994 Supreme Court 693] by the Supreme Court of Pakistan. Therefore, under Article 25A of the Constitution of the Islamic Republic of Pakistan, where education is to be provided free and compulsorily to all children between the ages of five and sixteen years, utilities like gas and electricity are supplied only where the people are able to pay for them. 

Then there is also a case against privatization of distribution companies as the state has failed in its management of power leaving the public helpless and in great misery, particularly during long hours of breakdowns or loadshedding.

This means that there are many in the country who are still deprived of these basic necessities. This is principally on account of the fact that the government has failed to lay down proper infrastructure to reach the remotest possible areas where the residents are left with no choice but to make their own arrangements.

Just like the failure of other civil administrative departments in Pakistan, successive governments have miserably failed to establish a proper network of electricity supply. Fraught with corruption and incompetence, this highly important sector has remained a bone of contention between those who have been vying over its monopoly, oblivious to the multiple problems of demand and supply confronted by industrial and domestic consumers. Imprudent policies have on one hand filled up secret treasure troves of beneficiaries and on the other, resulted in line losses, erratic supply, frequent break-downs, pathetic revenue and extremely heavy circular debts.

Obstinacy in refusing to acknowledge past mistakes by the governments, a shortsighted approach in signing contracts with power-producing companies, connivance between officials and dishonest consumers, theft of good conductor power lines which are then replaced with sub-standard ones, outdated transformers, faulty transmission lines, poor administration, incapability in identifying defaulters and power thieves, free supplies to certain entities, a complete dearth of adequate research and development to generate better and cheaper electricity; are some of the hallmarks of this highly crucial sector of our country. Promises made during election campaigns hardly see the day of light once a government is voted in power. Then the same blame game is repeated with no respite for the general public.

As more and more people turn towards solar energy, the graph for revenue generation by power companies is on the decline. Who would want to pay the exorbitant tariff for power when the same can be obtained freely from the sun?

Those Pakistanis who have the opportunity to migrate, find comfort and solace in countries where they can enjoy some peace of mind with respect to basic necessities of life. Those who are welded to this land in patronage and loyalty are left with no option but to make the best of whatever is available even if it means that despite obeisance to law of the land and paying all kinds of taxes and duties, they have to manage their own security, meet educational and health expenses, refrain from speaking out loud against injustice, and above all, arrange for their private supply of uninterrupted power. For this purpose, those who can afford have been investing heavily in installing solar panels to benefit from God’s free bounties rather than depend on paid energy sources.

As more and more people turn towards solar energy, the graph for revenue generation by power companies is on the decline. Who would want to pay the exorbitant tariff for power when the same can be obtained freely from the sun? Obviously this sudden dip in revenue, outstanding circular debts and irrational contractual obligations entered into with the power generating companies are enough to send out alarms in corridors of power. According to a news report, the sitting prime minister has directed National Electric Power Regulatory Authority (NEPRA) and power division to revise regulations for net-metering, amid declining revenues and increased solar adoption.

For those who are unaware, net metering allows consumers to sell excess electricity produced by their solar system to their power distribution company, resulting in significant savings in their electricity bill for the month. This was a great incentive for adopting solar energy that results in bills carrying credit amounts even though the difference in tariff between buying and selling is tremendous. Another advantage of installing solar panels is the much-craved for continuous supply, especially during the scorching summers and short-lived but harsh winters. Last but not the least, green energy is what our planet requires to combat pollution. 

As per Ed Davey: “If we can speed up the deployment of clean energy technologies in developing countries with investments from the Green Climate Fund, hundreds of millions of people will be able to access electricity for the first time - with all the education, health, communication and entrepreneurial opportunities electricity enables,” and in the words of Elizabeth May: “Once you got a solar panel on a roof, energy is free. Once we convert our entire electricity grid to green and renewable energy, the cost of living goes down,” yet the Pakistani government is in full mood to penalize users. It appears that there is resentment against those who are in a position to afford installation of solar power plants. The justification now being given is that because of such consumers, the poor are being over-burdened with extraordinary electricity bills.

Then there is also a case against privatization of distribution companies as the state has failed in its management of power leaving the public helpless and in great misery, particularly during long hours of breakdowns or loadshedding. Some lessons can be learnt from United Kingdom that in 1986 went forward with privatization. It is about time that the state should revisit its contractual obligations with the subjects, whose welfare and comfort hardly seem a priority.

The writer is a lawyer and author, and an Adjunct Faculty at the Lahore University of Management Sciences (LUMS), member Advisory Board and Senior Visiting Fellow of Pakistan Institute of Development Economics (PIDE)