Year 2021 ended with deep scars on the energy sector but it was not without significant gains for a few
Independent power producers (IPPs) could be called the winners while the ordinary people and the government were the losers
The year was a blessing in disguise for some energy tycoons while consumers continued to suffer
Despite paying billions of rupees to the IPPs, electricity prices remained high, which mainly contributed to the increase in inflation and may prove to be a setback in government’s efforts to win the elections of 2023
Consumers paid a high cost of electricity as base tariff went up in addition to the rise in electricity prices on account of monthly fuel cost adjustments
The high energy tariffs and gas load-shedding in winter added to the miseries of people, though the Pakistan Tehreek-e-Insaf (PTI) government had come to power with the promise of providing relief to the common man
It cannot be denied that the entire world suffered due to high energy prices in the recent past, but the case of Pakistan was different
A sharp increase in dollar’s value against the Pakistani rupee was another factor that led to high prices of energy
Pakistan is a net importer of petroleum products and liquefied natural gas (LNG), and the surge of dollar impacts the cost of imports
Power tariff During 2021, the base electricity tariff went up around Rs4 to Rs16 per unit, which was reflected in the monthly bills of consumers
The government introduced new tariff slabs under the first phase to slash power sector subsidies
It was apparently part of the commitments made to the International Monetary Fund (IMF) under the $6 billion loan programme
Read Power company supports transition to open markets The government split the slab of 301-700 units into four categories - 301-400 units, 401-500 units, 501-600 units and 601-700 units
Under the new slabs, 13
9 million consumers of electricity were removed from the subsidy net
Earlier, 22 million consumers were receiving the subsidy
Apart from that, the consumers were compelled to pay the highest power tariff primarily in the face of soaring prices of fuel, which power producers used in electricity production
In a big shock to the consumers, the National Electric Power Regulatory Authority (Nepra) allowed power distribution companies to increase tariff by Rs4
7446 per unit as fuel cost adjustment, which resulted in collection of an additional Rs61 billion from consumers through December bills
Private power utility K-Electric also sought a tariff increase of Rs5
449 per unit on account of monthly fuel cost adjustments and quarterly tariff adjustment
It will prove to be another blow to the consumers of Karachi
Energy sector winners The Inquiry Committee on Power Sector pointed out that the IPPs had got over Rs1 trillion under different policies and recommended the recovery of the amount from them
Read more Gas subsidy for exporters to cost Rs41b But instead of recovering the amount, the government struck a deal and decided to pay Rs403 billion to 46 IPPs
In first instalment, the government paid Rs89 billion as it diverted the subsidy meant for power consumers
Circular debt The growing circular debt continued to haunt the entire energy chain in 2021
In its report for 2021, Nepra said that the circular debt added to the miseries in the power sector and hit the entire economy
As on June 30, 2021, the circular debt stood at Rs2
280 trillion as compared to Rs2
150 trillion on June 30, 2020
It was around Rs1
6 trillion when the PTI government came to power in August 2018
The oil and gas sector also suffered a lot as its debt crossed Rs1
6 trillion during the year, prompting the government to form a committee to resolve the issue, but to no avail
For the first time in history, the receivables of state-owned oil marketing giant Pakistan State Oil (PSO) reached Rs420 billion
A major contributor to the swelling receivables was LNG supplies in addition to power producers
Refining sector Oil refineries suffered the most during the year under review, which were forced to reduce operations as the IPPs were reluctant to take furnace oil supplies
Though the country faced shortage of LNG due to high prices in the global market, furnace oil was in surplus
Still the oil was not consumed
Also read Power tariff hike of Rs4
33 on cards As stocks of furnace oil swelled, Pakistan Refinery Limited (PRL) was shut down whereas other refineries ran partial operations
In the area of oil and gas exploration, the country did not witness any major discovery
Rather, the reliance on LNG grew but additional imports could not be made
Oil prices During the year under review, the prices of petroleum products soared to record highs, impacting all consumers from manufacturing units to ordinary people
In January 2021, the price of per litre of petrol was Rs106, high-speed diesel Rs110
24, kerosene oil Rs73
65 and light diesel oil Rs71
81
In November, the per-litre price of petrol reached Rs145
82, high-speed diesel Rs142
62, kerosene oil Rs116
53 and light diesel oil Rs114
07
Petrol and diesel are used in cars, big vehicles and agriculture sector
Kerosene oil is consumed in remote areas for cooking purposes where liquefied petroleum gas (LPG) is not available
Now, the government is going to take more steps to cut subsidies, which will make lives of people more difficult at a time of soaring inflation
Published in The Express Tribune, January 1st, 2022
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| Date: | 02-Jan-2022 | Reference: | View Original Link |
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