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New Market Report: Pakistan Power Report Q1 2014

New Energy market report from Business Monitor International: "Pakistan Power Report Q1 2014"

 
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Boston, MA -- (SBWIRE) -- 12/31/2013 -- The Pakistani government continues to struggle to improve the country's power situation with a variety of measures, including a new five-year energy plan that was released on July 21, although success still seems far off. While the National Power Electric Regulatory Authority (NEPRA) has agreed with the federal government's tariff suggestions, we believe that greater difficulty lies in the collection of past debts and prevention of further losses due to bad debts and electricity thefts. Indeed, we maintain that there remains much for the new government to accomplish before the power sector can emerge from the ongoing crisis.

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Although the new government promised to usher in changes to the current myriad of problems, progress has been slow like its predecessors. Corruption and complicated bureaucracy continue to hamper the business environment, discouraging foreign investment, while provincial and federal governments seem to be losing the fight against the "entitlement" mindset that many citizens have, which often leads to unpaid bills and electricity theft. Even with the government's plan to privatise, either partially all fully, 31 state enterprises we believe this will only provide a temporary relief to the ongoing problem of circular debt that continues to cripple the country. Instead, we maintain that the government must push to end power subsidies and raise taxes to put the country and sector back on the path of growth.

Even though the government has shown much determination in its latest plan, it still faces the same problems that plagued previous governments. Load-shedding across the country remains high across provinces even as summer has given way to cooler weather. The weak power sector continues to arrest the country's economic development, as power outages weigh on productivity while transmission losses and electricity theft often result in more expensive electricity for businesses.

The sector continues to battle with huge losses due to poor performance of assets and power theft, which is estimated by officials from the Water and Power Ministry to be close to 45% of the energy transmitted. The total amount of bills defaulted by both private and public sectors continues to grow, with the government making little headway to install its proposed solutions such as pre-paid metering systems. Prosecution efforts against those who have unpaid bills dating back more than a year have also withered. Indeed, political will to power these efforts onwards seems to have dwindled, while the divide between provincial and central governments continue to complicate matters. Little word has been said on whether the latest energy plan will indeed be implemented as provincial governments will be liable for up to 70% of these unpaid bills and shortfalls will be deducted from federal transfers if these governments fail to recover.

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