October 1, 2022
  • October 1, 2022
  • Home
  • Power transmission
  • Power sector transmission and distribution losses soar to Rs 473 billion in 2021 – Latest News – The Nation

Power sector transmission and distribution losses soar to Rs 473 billion in 2021 – Latest News – The Nation

By on August 15, 2022 0

ISLAMABAD – Mismanagement and poor governance in the power sector increased transmission and distribution losses to Rs 473 billion in 2021, while total sector claims reached Rs 1.5 trillion.
According to the Pakistan Institute of Development Economics (PIDE) One-Year Growth Strategy for Pakistan, energy is a chronic problem that eight governments have failed to address. Due to mismanagement and poor governance in the power sector, huge transmission and distribution losses reached Rs. 473 billion in 2021, of which Rs. 402 billion was recovered through tariffs from electricity consumers and Rs. 71 billion was added to circular debt.
The Pakistan Institute of Development Economics (PIDE) has launched the “One Year Growth Strategy for Pakistan” on the occasion of the 75th anniversary of Pakistan’s independence. The PIDE report suggests a decentralized billing system at the DISCO level and the need to market prepaid meters, which consumers will buy themselves. Combine this prepaid meter with DISCO billing. This will create the possibility of minimizing receivables losses by 80% (total receivables at the end of 2021 stood at 1.5 trillion rupees, and they are increasing by 15% annually).
There is also a need to empower the regulator (NEPRA) to facilitate “rollover” at marginal cost to make it attractive to sellers (generators) and buyers (large electricity consumers). This will reduce the cost of energy for industry. All DISCOs should also be allowed to purchase power under a short-term contract and acquire generation assets within their jurisdictions and even outside them.
Despite extreme economic and political instability, Pakistan has still not been able to break away from the crumbling enigma of its unstable development. As a result, Pakistan’s economic indicators have fluctuated widely over the past seventy-five years. Pakistan has the lowest investment rate among neighboring countries: our policy is totally focused on tax rate and revenue collection, with no priority on investment and growth, the report says. The report says that historically the country has focused on taxation, not growth. “We need to focus on growth; for this we need to highlight investment, productivity and exports. However, to increase investment and productivity, which will lead to increased exports, we need to tackle the bottlenecks,” he said.
Another serious concern is that Pakistan’s debt-to-GDP ratio has steadily increased over the past decade. Research indicates that there is a negative linear association between debt and economic growth, regardless of debt types and country income levels. Moreover, since 1965, Pakistan has approached the International Monetary Fund (IMF) twenty-two times; the recent engagement with the IMF makes it the 23rd time. PIDE research also suggests tax reforms for sustainable growth. There must be a mandatory tax declaration, the distinction between declarants and non-declarants must be abolished. The distinction creates a nuisance and does not contribute to improving the tax net (the number of declarants was 2.28 million in 2020 and 2.29 million in 2021). Individuals file returns with 0 income only to take advantage of the filer. The PIDE recommends introducing a joint declaration instead of an individual declaration, and income tax should be universal and not segmented. The division of income based on agriculture, dividends, etc. must be abolished. An integrated, fair value, VAT-based sales tax system is the need of the hour. Besides these four areas, PIDE suggests that we also need to focus on our market spaces. PIDE proposes that Pakistan should grow at 7-9 percent. Other critical issues would be addressed through the spillover and ripple effect of such growth.