PEPCO continues to function despite directions for dissolution by the former cabinet 

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ISLAMABAD: Despite the directions passed by the Peshawar High Court (PHC) in 2011 and a decision by the then federal cabinet for its dissolution, the Pakistan Electric Power Company Limited (PEPCO) is continuously functioning to control the entire power sector of the country till date.

Interestingly, PEPCO was incorporated in 1998 in pursuance of the “Strategic Plan for Restructuring of the Pakistan Power Sector” to facilitate the transition process in the Water and Power Development Authority (WAPDA) power wing and effective corporatisation of new entities after unbundling of WAPDA.

In pursuance of this mandate, PEPCO signed a Memorandum of Agreement (MoA) with the Water and Power Development Authority (WAPDA) for a period of two years. PEPCO was established for a specific mandate for a period of two years and was to be dissolved thereafter. However, after a lapse of many years, PEPCO continues to function.

Later on, the Peshawar High Court (PHC) in its sou moto action on unscheduled load-shedding (power) in 2010 directed to dissolve PEPCO and the Cabinet (federal) decided in October 2011 to do the same. A notification was also produced before the honourable court (PHC) in this regard.

It is observed that the aforementioned decision of the Cabinet has not been implemented. PEPCO to date continues to function and operate. Therefore, it is unclear in what legal authority and capacity (if any) PEPCO is at functioning at the present.

Sources in the power sector informed that a bureaucrat has still intact PEPCO unlawfully as the ministry of water and power had informed the PHC that it had dissolved PEPCO. They said PEPCO is continuously controlling the financial and to some extent administrative affairs of the entire power distributing companies (DISCOs), power generation companies (GENCOs), The National Transmission and Despatch Company (NTDC) and the Central Power Purchasing Agency (CPPA). Usually, Additional Secretary of power division/ministry keeps the charge of CPPA’s acting Managing Director.  And, power ministry’s Additional Secretary/MD PEPCO controls the DISCOs and GENCOs by overseeing and managing the their financial matters. They also said that although DISCOs, GENCOs, NTDC, and CPPA have their own board of directors (BoD), yet PEPCO officials are continuously intervening and badly affecting the entire power sector of the country.

“A DMG (District Management Group) officer while working as Additional Secretary Power Ministry gets a salary from the ministry and at the same time the secretary keeps the charge of PEPCO MD  and enjoys other perks and privileges besides issuing instructions about payments to the owners of power plants,“ said sources.

They added that CPPA has been collecting amounts from DISCOs and PEPCO has been found giving instructions about the distribution of payments while the distribution of payments as per the own sweet will of MD PEPCO has been causing losses to the DISCOs, GENCOs and national exchequer as well.

Official sources at the power division, who requested anonymity, said that the functioning of PEPCO was unlawful as it has no legal status. They said that the high ups at the power division illegally control Rs2,200 billion in the sector – a sector that has constantly faced losses due to government inefficiencies. There is no need and use of PEPCO as DISCOs, GENCOs, NTDC and CPPA have their own BoD to take important policy decision, officials added.

The National Electric Power Regulatory Authority (NEPRA) has also sought information from the power division on the subject of PEPCO. NEPRA has sought about PEPCO’s mandate and role in the energy sector; the legal authority under which PEPCO is functioning particularly in the light of the 2011 directions by PHC (Peshawar High Court) and the decision by the Cabinet for the dissolution of PEPCO. Further, role and function envisioned (if any) for PEPCO, particularly in light of the recent NEPRA Amendment Act.

“Your expeditious response on the subject would be greatly appreciated and beneficial for the regulator in exercising its functions under law,” says the official document.

Since its inception, PEPCO has assumed the role of overseeing and managing ggovernment-owned distribution and generation companies with the objective to improve their quality of service, reduce line losses and load shedding, minimize tripping and theft, constructing new grid and such other related matters.

That being the case, it is pertinent to highlight that over the years the DISCOs performance key indicators have shown deterioration with respect to losses, interpretations, voltage function, recovery, safety and consumers complaints. Same is the case with generation companies owned by the government. This aspect has been highlighted in NEPRA’s State of Industry Reports and Performance Evaluation Report of NEPRA from time to time. As such, it is evident that PEPCI, in its capacity as the overseeing and management body of public sector entities has failed in executing this role in an efficacious and positive manner.

The NEPRA in its communication with power division, has also asserted that the foregoing facts raised concern that warrant examination. More, importantly, the entire energy sector has recently been reformed by way of the Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Act, 2018. Under the said reforms, the energy sector is envisioned to be liberalized by way of de-regulation, market operations, and expanded monitoring and enforcement by the regulator (NEPRA). However, PEPCO’s effective role in these reforms and trajectory of the energy sector remains unclear, said NEPRA.

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