47. Pakistan Economic Survey 2011-12 - Consultancy Services in ...

EnergyStock Issue• Recovery of receivables of DistributionCompanies (DISCOs) of Rs. 354 billion (Feb2012) is essential to clear the circular debtagainst payables of Rs. 398 billion (April 2012).• Unpaid power tariff differential subsidy (Rs.301billon) until 30 June 2009 picked up by GoPthrough Power Holding Private Limited (PHPL)company. Stock of Rs.120bn of outstandingtariff differential subsidy (TDS) for FY10 waspicked up by the Federal Government in May2011.• Debt swap of Rs. 150 billion has been donewhich covers sizeable proportion of circulardebt.Supply Side Management• 3,400 MW has been added since 2008.• Most efficient plants are being dispatched tomaintain to conserve fuel.• Economic dispatch to conserve fuel is beingimplemented.• Gas Supply to Karachi Electric SupplyCorporation (KESC) has been increased toimprove fuel mix and ensure maximum supply.• Change Combined Cycle plants to coal (24months).• Mangla raising project is completed and theproject is also inaugurated.• Diamer Bhasha Dam of 4,500MW generationcapacity inaugurated• 1400MW Tarbela 4 th extension initiated.During 2011-12, energy outages in Pakistancontinued to be the dominant constraint in its growth.Yet, traces of energy supply shortages can be tracedto the independence of the country. Till the 1980sless than two-third of the energy requirements weremet through its own domestic resources. In the 1990sPakistan was still engaged in various efforts to bridgethe wide gap between increasing demand and limitedenergy supply. Further in the early 2000s, the energysector (especially its sub sector electricity) receivedgreater attention because of the faster rate of growthin its demand. By 2011-12, electricity and gasshortages are considered to be the primary cause ofconstrained production activities in a number ofindustries. Energy intensive industries (Petroleum,Iron and Steel, Engineering Industries and Electrical)shaved off 0.2 percentage points from real GDPgrowth in 2010-11 and in 2011-12. Also, theestimated cost of power crises to the economy isFlow Issue• Efforts for 100 percent recovery of current bills areunderway along with disconnection of defaultersafter 45 days (reduced from 90 days) without anyexemption/discrimination. A total of 210,301disconnections carried out during July-Feb 2012.• Two months security deposit shall be paid by newand defaulting consumers to get a reconnection.• Refund of General Sales Tax (GST) on uncollectedbills of more than 180 days has been approvedDemand Side Management• Lines losses reduced from 20.4 percent (FY10) to19.6 percent (FY11). Loss mapping in eachDistribution Companies (DISCOs) is in progress toexactly pin-point the losses and their sources toachieve the target of 18.7 percent losses in FY12.• Load Management conservation measures to saveabout 1000MW put in place.• Promote Private Sector Participation in the Sector• Expression of Interest (EOI) for private biddersissued for O&M contracting for GenerationCompanies (GENCOs).• GoP in the process of finalizing Operations andmaintenance (O&M) contracting wherever requiredfor Distribution Companies (DISCOs).• Work on coal fired plants has been expedited.approximately Rs.380 billion per year, around 2percent of GDP, while the cost of subsidies given tothe power sector to the exchequer in the last fouryears (2008-2012) is almost 2.5 percent of GDP, (Rs.1100 billion). The liquidity crunch in the powersector has resulted in under utilization of installedcapacity of up to 4000MW. It has also affectedinvestment in power sector.Flood was one of the factors which caused electricityand gas shortage as it damaged the distributionnetwork (i.e., 90 percent of distribution transformersto the petroleum and gas fields). “The total damage tothe energy sector was of Rs 1.2 billion (US$ 14.2million) according to Asian Development BankReport, “2011 Pakistan Floods; Preliminary Damageand Needs Assessment”. Lower accumulation ofwater reserves in dams along with high internationalprices of oil has compounded the pressure on195