Circular debt continues to haunt power sector

Islamabad

The country is still facing circular debt even after three years rule of the PML-N government as the receivables of power sector have alarmingly increased to whopping Rs684.06 billion and payables have mounted to Rs299.06 billion in the financial year 2015-16 ending on June 30, 2016.

In June-July 2013, the PML-N government had erased the circular debt of Rs480 billion in one go (Rs342 billion through cash payments, and Rs138 billion through non-cash adjustments), but the circular debt has again emerged at Rs299.06 billion heralding that the power sector is still beset with inefficiencies, line losses and thefts.

According to official data for the year 2015-16 exclusively available with The News, in year 2013, the receivables of the power sector stood at Rs411 billion which swelled to shocking figure of Rs684 billion in 2015-16 showing that how much the power sector is inefficient. The data shows that the private sector has emerged as the biggest defaulter of Pakistan Electric Power Company (Pepco) as it owes dues of Rs422.75 billion.

The data pertaining to receivables shows that the federal government owes Rs4 billion, AJK government Rs65.47 billion, Fata Rs20.60 billion, Balochistan (Agriculture tube-wells) Rs25.36 billion, K-Electric Rs46.24 billion, provincial governments Rs99.62 billion, private sector Rs422.75 billion and IPPs Rs0.03 billion.

However, the data about payables tells that the Central Power Purchasing Agency (CPPA) needs to pay Rs299.06 billion to various entities that include the amount of Rs31.94 billion to Wapda hydel, NTDC and others, Rs173.03 billion to independent power producers (IPPs) and Rs75.32 billion in the head of oil payments. In addition, it also owes to pay Rs18.77 billion in the debt servicing of the loans of Rs335 billion parked in PHPL (power holding private limited). In 2014-15, CPPA paid Rs19.1 billion as interest on the loans of Rs335 billion which means that the total amount of Rs37.87 billion will be paid by the electricity consumers in financial year 2014-15, 2015-16 as debt servicing surcharge imposed in electricity bills since 2013 on the hefty loans of the power sector that stand at Rs335 billion.

Though the recovery of electricity bills, according to the data, has increased up to 94.4 percent in 2015-16 from 89.2 percent in 2014-15, and the line losses have also reduced to 17.9 percent in 2015-16 from 18.7 percent, but the massive increase in receivables up to Rs684.06 billion speaks different story.

However, the data does not mention at all the role of inflated bills that consumers received in 2015-16, four taxes and three kinds of surcharges that electricity consumers have been paying since 2013 in increasing the recovery of billed electricity to 94.4 percent.

The electricity bills recovery data shows that the system braved Rs56 billion loss in the head of recovery of electricity bills as electric power distribution companies (Discos) in 2015-16 in toto billed the electricity worth Rs997.256 billion and recovered the amount of Rs941.256 billion showing the loss of Rs56 billion. However, in 2014-15, the system sustained the mammoth loss of Rs119.786 billion as CPPA billed electricity of worth over Rs1.013 trillion and recovered the amount of Rs894.136 billion against the billed electricity. If compared with financial year 2014-15, the loss in recovery has reduced by Rs 63.784 billion in 2015-16.

The line losses and electricity theft which stands at Rs17.9 percent right now means that the power sector braved the loss of Rs29 billion in 2015-16.

Of the private sector, the running defaulters also owe close to Rs100 billion alone, but they continue to enjoy the electricity. The running defaulters known as chronic defaulters mainly consisting of big business houses in Faisalabad and Lahore are not inclined to pay their power dues, but they have managed to get the stay orders and are still getting electricity.