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Saturday July 13, 2024

PM annoyed at rising circular debt

Prime minister chaired the much-awaited Cabinet Committee on Energy (CCoE).

By Our Correspondent
July 06, 2024
Prime Minister Shehbaz Sharif is addressing the nation on June 15, 2024. — PID
Prime Minister Shehbaz Sharif is addressing the nation on June 15, 2024. — PID

ISLAMABAD: Prime Minister Shehbaz Sharif on Friday expressed his displeasure on the failure of power division to contain the circular debt to a reasonable level.

The prime minister chaired the much-awaited Cabinet Committee on Energy (CCoE).

The committee approved a standardised security package document for the private sector to invest in small hydel projects under Power Policy 2015. The PM decided to ensure the perpetual supply of electricity to the masses of Gligit-Baltistan.

In the meeting, it was told that the monster of the circular debt continued to bite the country’s power sector and the economy as well which has escalated by 18.14 percent (Rs419 billion) to Rs2.729 trillion during July-April 2023-24 which tumbled in May, 2024 to Rs2.655 trillion but it is still on the higher side as the IMF wants the government to contain it at Rs2.310 trillion by end of the FY24, a senior official who attended the meeting told The News.

During the first ten months of fiscal 2023-24, the circular debt has increased to Rs2.729 trillion, including the escalation in payment to IPPs up to Rs1.854 trillion, payables to Gencos at Rs109 billion, and the volume of the loans of Rs765 billion parked at GHPL. During July-May, 2023-24 period, the Discos inefficiency losses have jacked up by 69.12 percent to Rs230 billion from Rs136 billion in the same period of fiscal 2022-23. The losses by Discos in terms of less recovery have also alarmingly increased by 9.27 percent to Rs279 billion from Rs248 billion in the 11-month period of FY2022-23. This also questions government’s drive against electricity theft.

This dismal picture irked the premier who ordered the Power Division to take result-oriented measures to contain system losses. He approved the setting up of the Support Unit to increase the capacity of the Discos to stop electricity theft and reduce the inefficiency and recovery losses.

The Discos Support Units would be in place for two years after the approval by the federal government. The units would start working from Mepco.

In addition, the committee also approved the incentive package for the officers for recovery of non-paid bills and those bills that have been delayed by the consumers in terms of payments.

Coming to the circular debt issue, the official said that after January, 2024, the Power Division did not upload the data about the circular debt on its official website showing how the top functionaries failed to continue escalating circular debt to Rs2.31 trillion -- the limit imposed by the IMF. Other components that contribute to the circular debt also include budgeted but unreleased subsidy of Rs10 billion, interest charges of Rs138 billion on PHPL loans and IPPs, the pending generation cost of Rs176 billion in the heads of the quarterly tariff plus monthly fuel adjustments), and non-payment of Rs48 billion by K-Electric.