Power Division is convinced that it was a loan and not meant specifically for use for curbing power theft project, the sources continued. "Smart metering is not the solution to stop electricity theft and if there is a need to replace present meters, it''s better to install pre-paid meters," the sources added.
In 2015, Executive Committee of National Economic Council (Ecnec) had refused to approve Advanced Metering Infrastructure (AMI) projects for IESCO and LESCO until reservations of the Planning Commission were dealt with. Both projects also included establishment of new customer information and billing systems. The project in respect of IESCO would have cost Rs 18. 607 billion, and Rs 30.597 billion for LESCO.
The Planning Commission of Pakistan also opposed the loan, stating that the project was technically unfeasible. The commission wanted ADB to instead fund transmission expansion projects. There was a consensus in the erstwhile Water and Power Ministry that the government should not install smart meters as the project would swallow $3-3.5 billion without having any impact on energy losses. He argued that smart meters cannot control "Kundas" which is the main instrument of electricity stealing.
According to sources, there was also an impression in the Planning Commission that "kickbacks" may have been taken in the project. The government has to move very carefully, as it''s a loan not a grant like the USAID project which did not hand over the project to Mepco and Pesco, sources added.
The sources said that poor financial conditions of Discos means they are not in a position to pay a compound interest rate of 17% that includes paying interest to the federal government. The loan had been taken on the balance sheets of the power distribution companies and under the current federal re-lending policy, the government charges interest rates which are about three times more than what Pakistan actually pays to the global lenders.
The Planning Commission observed that an erroneous assumption in the relevant circles is that there would be a significant and immediate impact of the proposed projects on the T&D losses and tariff reduction. It may take full ten years and investment of$6-8 billion at a country level.
The Water and Power Ministry (now Power Division) had failed to justify the project at any level. "We did not want to waste the loan already approved by the ADB Board and wanted to use it for another project but ADB is unwilling to accept our request," the sources maintained.
Senator Musadak Malik former caretaker Minister for Water and Power argued that smart metering is the only solution to curb power theft in the country. The structure of ADB''s $ 990 million loan was not viable because of old technology. ADB had already conceived technology and wanted to implement in Pakistan, sources added.