ISLAMABAD: The government is doing its utmost efforts to cope with the power crisis. The government has given directions to National Electric Power Regulatory Authority (Nepra) to increase electricity tariffs to cover the cost of theft and other elements of circular debt estimated at Rs145 billion.
Tariffs currently charged to consumers include some of the costs of production of the electricity, minus the subsidy the government pays to keep electricity prices artificially low. However, there are at least four other costs that are currently not being paid for, which cause the receivables of power companies to rise, leading to the vicious cycle of inter-corporate circular debt in the energy that financially cripples power companies, causing them to cut power supply and shutting down electricity supply to most of the country.
The biggest cost unaccounted for is that of theft. Current tariffs only allow for 12.82% in transmission and distribution losses, as opposed to actual losses of 18.76%, resulting in significant losses for power companies. It is not clear how much of these losses are due to theft and how much due to poor infrastructure. Even in developed countries like the United States, transmission and distribution losses tend to be around at least 7%.
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