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Tuesday, January 31, 2023

Electricity theft in Pakistan and Debt Burden

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A society where theft is not deemed as theft is never progressive, and it is an individual’s responsibility to highlight the issue. Pakistan is a country with 220 million people, and most of the citizens are poor and live without basic facilities. In the current situation, almost 50 million people have no access to electricity in Pakistan. And research by World Bank shows that the country lost $4.5 billion in 2018 due to regulatory and systematic issues. Electricity theft in Pakistan is one of the significant reasons for pilling debt on the electricity supply companies. It is perceptible that the country will foresee the rising loss of energy and energy import bills.

What does the Economy Survey tell us?

According to the Economic Survey of Pakistan, the country increased its electricity generation capacity to 11.5% (41,557MW) in 2021-22. Amid surplus electricity generation, the country’s hydel power generation capacity marginally lies up to 24.7%, RLNG 23.8%, natural gas contribution declined to 8.5%, and Nuclear Energy increased to 8.8%. As per reports by the World Bank, the country has rapidly expanded its access to electricity between 1990 to 2022, but the lack of concentration on electricity theft has increased the burden on the tax-paying households who, in terms of price increase per unit, must pay to balance the import bill and debt on the electricity generating power plants. According to NEPRA, In June 2021, Pakistan’s circular debt stood at Rs. 2.280 trillion, and the low recovery of bills and non-payment of subsidies are the major causes of the debt increment.

Major Imports

Energy is essential for driving a prosperous economy and boosting business activities. It is the source for billions of people as it helps generate income and helps in the survival of human beings. Pakistan is one country that produces electricity from Hydropower, RLNG, Nuclear, Coal, and Oil. Therefore, the country spends most of its earnings on importing RLNG, Coal, and Oil. Currently, Pakistan imports 70% coal, 7.4 million tons of RLNG, and 630,000 tons in May 2022. In the below-mentioned graph, the circular debt and import of RLNG are visual for the readers.

The graph shows that Pakistan’s Gas Sector is on the hit list regarding payments. As the country currently grapples with the ticking bomb of circular debt.

Circular debt

We study various countries and their electricity distribution methods for proper electricity regulation. Meanwhile, the primary reasons we found that affect the circular debt are the non-recovery of bills, direct hooking (usage of electricity without a meter), and involvement of related institutions in Pakistan. Electricity theft in Pakistan is the main hurdle in improving distribution and grid-system.

The government of Pakistan has not taken any step yet, nor the electricity-supplying institutions are taking such serious steps. According to the 2018 Senate Committee on Circular Debt Report, the estimated cost of power theft was Rs. 53 billion, increasing as consumers surge. In addition, most consumers do not consider electricity theft a robbery but an opportunity to take benefit. Also, no checks and balances on the meter reading and persons involved in providing such services for money make it more challenging to end the circular debt. The related authorities should take strict actions against such loopholes and hold the involved individuals accountable. Pakistan needs to get rid of electricity theft, or it will badly affect the economy and the citizens paying high bills, as depicted in the below figures.

Source: https://www.dawn.com/news/1661674

Province-wise Electricity Theft

To highlight the loss of energy theft and bill recovery, we identified province-wise electricity theft and compared the considerable loss and its impact. A research study concludes that KPK faced an electricity loss of almost Rs. 5697.6 million in 2020. And power thieves almost gave a loss of Rs. 12.93 billion. Two districts of KPK topped the electricity theft, Mardan and Bannu. According to the Joint-Secretary Power Division, the loss of electricity distribution was primarily identified in Peshawar, Islamabad, and Hyderabad. Wherefore, Sindh stands at the second number where 30% to 40% bill recovery is a nightmare.

According to the document by The News, in 2018, Sindh faced 1.126 billion units stolen. Also, the records showed that Punjab ranks third in electricity theft as Rs. 12.429 billion of electricity was theft. Lastly, Balochistan also faces electricity theft in the coffin, and it caused a loss of energy of approximately Rs. 6.751 billion.

Recently, we have visited more than 50 villages in different parts of Sindh and Balochistan. Wherefore, we found that there is no meter system and direct hooking is on the rise. However, we interviewed residents, who enclosed the reason we are paying bills. But they pay some amount to the persons belonging to the related institutions. We also found that direct hooking destroys the fair distribution of power and neglects the meter regulatory system. The residents were encouraged to do the same activity and were sure that the theft culture would continue to rise soon. The reason for encouraging residents is the connection between the institutions facilitating them for money. So, the money recovered from the consumers is not going into the government’s pocket, but related institutions are filling themselves.

Conclusion

After reviewing all the loopholes, we assume that the country can fight the loss of energy and the power theft menace, and soon it can leave the barrier of rising prices per unit due to circular debt. The concerned authorities should install proper regulatory meters and somewhat track down electricity theft in Pakistan by taking strict action against the hooking system. Moreover, leaders should identify the involved persons taking bribes and encouraging thefts. A prosperous nation is always responsive and takes the opportunity to eradicate loopholes together. We need to take action now and support emerging Pakistan.

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