No loadshedding in next seven months, claims Miftah

ISLAMABAD: The nation will not be facing power loadshedding for the next seven months just because of the liquidity crisis in the power sector.

“If the masses are subjected to power outages just because of the cash flow situation, then it would be seen as mala fide design of the caretaker regime, former finance minister Dr Mifta Ismail told The News in an exclusive chit chat on Sunday.

He said the PML-N government had brought the circular debt down to Rs397 billion by May 31, 2018, and more importantly the ECC had also allowed the Power Holding Private Limited (PHPL (GHPL) to arrange Rs50 billion loan from the commercial banks to further offload the circular debt to Rs347 billion enabling the government not to go for loadshedding for next seven months.

To this effect, a terms’ sheet was being finalised and hopefully the amount of Rs50 billion will also be arranged by GHPL prior to Eidul Fitr which will be used to further reduce the circular debt to Rs345 billion. Containing the circular debt at Rs347 billion will be enough for the system to run smoothly.

Ismail said if the circular debt was contained at Rs400 billion even then there will be no crisis for the power sector and in case it exceeded the figure of Rs400 billion, then the system will start experiencing the problems.

He also disclosed that in the head of subsidy Rs15 billion is still left to be disbursed in the outgoing financial year to ease the cash flow situation and for next budgetary year 2018-19 the government had earmarked Rs146 billion to this effect.

He said in the last five years of PML-N rule, there had been no loadshedding in the country just on account of circular debt, as the government had not allowed this menace to go beyond the unmanageable limit.

He also pointed out that the country was facing 3000MW deficit in hydro generation in the wake of less flow of water in dams. According to the top notch of the power division, the government in first phase released Rs80 billion out of which the hefty amount of Rs27 billion was paid the banks in the head of servicing of the debt borrowed by power sector and remaining Rs53 billion was paid to the (Independent Power Plants) IPPs, nuclear power plants and state-owned Pakistan State Oil.

And in the second phase, the Power Holding Private Limited (PHPL) has borrowed Rs50 billion to further offload the circular debt and this amount has been disbursed to the various stakeholders of the sector.

The Finance Ministry right now is in the process of finalising the terms sheet with some Commercial Banks for more loan of Rs50 billion and this amount will also be used to further slice down the circular debt. More importantly, the government has paid to IPPs 87 percent amount of their current arrears and they will have more amount in the days to come.

The payments to IPPs will enable them to continue to produce electricity on maximum capacity during the caretaker regime.

When his attention was drawn towards the fact that the IMF and World Bank had earlier agreed with the authorities concerned on the figure of Rs325 billion arguing at that level, power sector will have no liquidity crisis, but the government was going to hand over the system to caretaker government with circular debt of Rs375-380 billion, the official responded saying that Rs325 billion figure had no more relevance to the system as the power generation of the country had now increased to over 29,000MW which was why now the latest figure of Rs375-380 billion had been worked out and at this level if the circular debt was contained, then there will be no cash flow problem in the system.

The official said usually in the months of April, May, June and July, the recovery of the amount of billed electricity remains excellent. However, this time in April and May, the recovery was not up to the mark. However, the recovery will improve in June and July that will also help caretaker regime avoid the liquidity crisis.