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Opinion

Capital suggestion

June 10, 2018

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Rs6 trillion

Rs6,000,000,000,000: that is the amount that has gone up in smoke over the past five years. That means that each and every Pakistani family has lost nearly Rs200,000 in the past five years. That means that each and every Pakistani has lost Rs30,000 in the past five years. It is all our money. Who is losing it and why?

Public-sector enterprises (PSEs): Over the past five years, a total of 190 PSEs, owned and operated by the government of Pakistan, have collectively lost Rs3.7 trillion. We know that PIA has lost a staggering Rs197 billion over the past five years. We know that Pakistan Railways loses around Rs35 billion a year. And we know that Pakistan Steel Mills have accumulated losses of over Rs177 billion.

In 2013, PSEs lost Rs495 billion. In 2014, 2015, 2016 and 2017 losses increased to Rs570 billion, Rs712 billion, Rs862 billion and Rs1.1 trillion, respectively. Imagine, PSEs managed to lose Rs1.1 trillion last year. Incidentally, in the budget 2018-19 Rs1.1 trillion has been allocated to defence. I know that PSEs were losing tons of money every year but had no idea that a colossal Rs3.7 trillion had gone up in smoke over the past five years.

Commodity operations: Over the past five years, the Pakistan Agricultural Storage and Services Corporation, along with the provincial food departments, bought several million tons of wheat and sugar. As of March 2018, according to the State Bank of Pakistan, total liabilities in the shape of bank loans stand at Rs628 billion. This is another kind of circular debt that somehow doesn’t get much attention. But it is there, and is growing.

Circular debt-electricity: According to Yousaf Naseem Khokhar, the former federal secretary for the ministry of water and power, the amount of the ‘old circular debt’ was Rs452 billion, and the amount of the ‘new circular debt’ was Rs570 billion – a total of Rs1 trillion. When Wapda is unable to pay independent power producers (IPPs) for the electricity bought, the IPPs borrow from commercial banks to keep operating, but there’s only so much that the commercial banks can lend. The sheer magnitude of the circular debt has now put the entire financial system at risk.

Circular debt-LNG: The Sui Northern Gas Pipelines Limited owes PSO an amount of Rs28 billion on account of LNG, whereas the SNGPL claims that the independent power producers, government-owned power projects, fertiliser plants and CNG stations owe Rs16 billion to the SNGPL. This is another kind of circular debt that somehow doesn’t get much attention. But it is there, and is growing.

Power sector budgetary allocations: Over the past five years, the accumulated budgetary allocation for the power sector has been Rs965 billion. It is true that the installed capacity has gone up from 23,531 MW in 2013 to 29,573 MW, but the actual generation has only moved from 104,889 GWh to 117,236 GWh – a mere 11 percent increase over five years.

For the record, losses at PSEs have more than doubled since 2013 – from Rs495 billion to Rs1.1 trillion. This is Rs6 trillion worth of Pakistani taxpayers’ money that has gone up in smoke. And the government now wants even more taxes.

The writer is a columnist based in Islamabad.

Email: [email protected] Twitter: @saleemfarrukh

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