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June 21, 2018

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Circular debt and late-payments: ‘Chinese investors may withdraw from Pak power sector’

ISLAMABAD: Amid the ballooning power sector’s circular debt, private sector investors have expressed the apprehension that Chinese investors may withdraw their investment from the sector due to late payment of their dues.

CEO HUBCO Khalid Mansoor said that due to delay in payments to the bank, they are paying extra mark up and the government is not ready to pay it. Chinese investors also have reservations over late payment interest and they may withdraw their investment, he said.

Due to delay in payments to the bank, they are paying extra mark up and the government is not ready to pay it. Chinese investors also have reservation over late payment interest and they may withdraw their investment, he said. “We have requested the finance minister for the resolution of issue and if the issue was not resolved china may withdraw from the power sector agreements,” he said.

Circular debt during three weeks of this caretaker government has increased by 40 billion rupees, as by end of the PML-N government’s tenure on May 31, this debt was 507 billion and now it is 547 billion, said CEO HUBCO while briefing the senate special committee on circular debt here.

Senator Shibli Faraz chaired the meeting and discussed the issues of circular debt, electricity theft and load shedding. Khalid Mansoor said that the previous government has paid Rs 200 billion and after that no payment was made.

HUBCO CEO further said that America has changed its policy regarding coal power projects and China is the only country that is providing help for the coal projects.More than 30 percent electricity is being generated from furnace oil and this is the reason that power tariff in the country is highest in the region Senator Jamal Deeni said that the demand for the electricity remains constant during the entire year. He said that Baluchistan is getting least electricity which has destroyed the industries in the provinces

HUBCO chief said that GENCOs don’t have funds that’s why they are generation less electricity. He said that out of 25000 MW half is being generated by the private sector.

Officials of the power division informed that they have integrated plan under which the less efficient plants will be closed down in phases. NEPRA has cancelled the licenses of Faisal Abad, Multan and Shahdara power plants. The power division officials recommended that the re-engineering of machinery should be banned and GENCOs should be handed over to private sector. The committee was informed that from 2004 to 2013 only 4000 MW was added to the system which result the electricity crises. The electricity shortage has negative impact on the GDP.

Meanwhile CEO Saif Power Sohail Haideri said that in the past the gas supply to the private power plants had been changed and since Diesel was expensive we had to close our plants. During seven years our dispatch was only 40 percent, he said.

CEO HUBCO said that due to transmission losses they have to bear Rs 130 billion annual loss. He said that the average price of electricity in Pakistan is Rs 13 per unit which is only Rs 7 in India, he added. Shibli Faraz said that there is presence of oil mafia and the country is being kept on the ventilator. He said that Nepra is trying to regulate but its unable to do it. He said that the power sector debt is more than Rs1000 billion and “if we didn’t change the practice the country will be in big crises”.

CEO PEPCO said that to end the circular debt the improvement in governance system is required. The CEOs of some Discos were changed six or seven times within the span of five years, he said, and questioned that in such a situation how things can get better.

The CEO of Kot Addu Power Company Limited (KAPCO), Aftab Butt, said that instead of providing subsidy to the life line consumers the government should provide them electricity from alternate sources.

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