Staying out of power

The caretaker Cabinet had turned down the proposal to set up Performance Monitoring Units in five power distribution companies (DISCOs)suffering significant losses because this would have been a quick-fix and would not have worked in the long term. The PMUs would have been headed by a brigadier and included officers from the Pakistan Administrative Service, the FIA and an intelligence agency. The rationale was that the DISCOs were suffering losses because of the theft of electricity. The Power Division itself had proposed the PMUs, but they were rejected because the basic problem had not been resolved: finding the right men as DISCO CEOs.

The failure of leadership of the DISCOs was the cause of their current financial crisis, where they had receivables of Rs 1.8 trillion, while circular debt had gone up to Rs 2.3 trillion. However, instead of finding the right heads of the DISCOs, the PMU idea had been floated, a rather poor solution to other problems, with Rs 589 billion losses projected for the current fiscal year, comprising ‘under-recovery’ and line losses exceeding NEPRA’s acceptable threshold. These figures, which reflect a sclerotic organization, have made privatization that much more difficult, because while state-owned enterprises are expected to be loss-making, the financial picture of the DISCOs may be enough to drive off any buyer.

To be fair to the Power Division, it is not the easiest of tasks to find a suitable CEO for a DISCO, one who can reduce theft and reduce line losses. If, as has been the practice, someone from inside the organization is appointed, he may be tainted with the atmosphere of the organization. Even if personally honest, he may find it difficult to act against acquaintances. If an outsider is appointed, he may not be acquainted with the ethos of the organization and the necessary acumen and expertise. The Cabinet may be right to decide against the PMUs, though it is a little disconcerting that it has taken the PMUs off the table with only about two weeks left before the elections. The next government has rightly been left to tackle the twin issues of circular debt and DISCO MDs, but the PMU decision could have been deferred for its decision.