News
Saturday, October 02, 2010
PEPCO dissolved, distribution cos made independent* Pervaiz Ashraf says PEPCO was facing Rs 400 billion circular debt
* DISCOs will be responsible for meeting own expenses
By Zeeshan Javaid
ISLAMABAD: The government on Friday finally disbanded the Pakistan Electric Power Company (PEPCO) under the power sectors reforms agreed with international financial institutions (IFIs).
“Orders to dissolve PEPCO have been issued,” Water and Power Minister Raja Pervaiz Ashraf said on Friday.
Speaking to reporters, Ashraf said PEPCO had been facing huge losses and a circular debt of Rs 400 billion. He said distribution companies (DISCOs) would now function as independent entities and be responsible for meeting their own expenses.
The minister said that the gap between cost of generation and cost of services had increased by Rs 20 billion per month, while it was annually estimated at Rs 250 billion.
He said that during the first phase of restructuring of the power sector, four distribution companies, including the Lahore Electric Supply Company (LESCO), Faisalabad Electric Supply Company (FESCO), Islamabad Electric Supply Company (IESCO) and Multan Electric Power Company (MEPCO), would be made independent and autonomous bodies, while the government had set the target to complete its first phase within nine months.
Ashraf announced that a team had been formed to oversee the transition process. The move comes in accordance with the government’s commitment with the IMF to dissolve PEPCO, withdraw tax exemptions on goods and levy 15 percent tax on services from October 1.
“To meet the current needs of power generation, we needed to improve the fuel mix mechanism to generate more electricity with low cost as per the directions of Prime Minister Yousaf Raza Gilani”, he added.
Planning Commission Deputy Chairman Dr Nadeemul Haq had earlier announced that the government had committed with the IMF to dissolve PEPCO before October 31, which would herald an end to universal electricity tariff regime nationwide.
The disbanding was said to be part of a larger plan of resolving problems plaguing the energy sector.
PEPCO had been putting undue pressure on the government’s already limited public resources due to inefficient functioning. Donors had been pressurising the government to de-regulate the company and its distribution companies and avoid subsidising electricity.
Under the new tariff regime, the government would not pick up the line losses and cost of electricity of power distribution companies.
The water and power minister said that eight projects had already gone into operation, while 11 more projects would be made operational by the end of this year and the remaining projects would be completed by 2015.
He said electricity theft cases had been registered against over 33,000 people during the last two years and 461 people involved had been arrested.
Courtesy www.dailytimes.com.pk