Essay About Tariff Determination And Unfavorable Generation Mix

Note on Circular Debt and Water Issue
Note on Circular Debt and Water Issue
The causes and impacts of power sector circular debt in Pakistan
Primary causes of circular debt: (First page of Executive Summary)
Poor governance
Delays in tariff determination
Fuel price methodology
Poor revenue collection
Delayed and incomplete payments by Ministry of Finance
Prolonged stays on fuel price adjustment
Transmission and distribution losses
Secondary causes of circular debt: (Second page of Executive Summary)
Need for improvement of thermal efficiency of GENCOs and NEPRA to set tariff on actual vs. estimated heat rates.
Inadequate budgeting of the TDS
Unfavorable generation mix due to the GOPs fuel allocation policy
Non-commercial/non-professional approach to load shedding
Non-improvement of tariff terms
GOPs neglect in promoting demand side management, energy efficiency and renewable energy resources
Need to settle payment arrears
Recommendations: (Third, Fourth and Fifth page of Executive Summary)
To resolve these problems, the GOP needs to achieve two tasks:
Remove circular debts from the books of energy companies. Reallocate it in consumer tariff or place a tax on the consumer to recovery over time.
Undertake specific programs to improve governance and performance
Recommendation to achieve point number 2 above:
Role of GOP
GOP to define its role as a policy builder allowing corporatization for proven financially sound entities
GOP needs to support a more competitive market
Tariff and subsidy disputes between the provincial governments and CPPA and the DISCOs need to be resolved either by arbitration or negotiation
Legislation declaring electricity theft punishable crime
Selection criteria and methodology of selecting DISCOs BODs to be improved
Eliminate uniform tariff and gradually