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February 15, 2020

Power Division says circular debt almost Rs1.8tr: The News stands by its story

National

February 15, 2020

ISLAMABAD: Spokesperson of the Power Division while commenting on current status of Power Sector Circular Debt, total liabilities and receivables said that Circular Debt at the beginning of Sept 2018 when the PTI govt took office was 1.33 trillion and was increasing at a rate of 38 billion a month.

With the measures taken by the govt, encapsulated in the Circular Debt Capping Plan, the Power Sector has considerably reduced the rate of increase to approximately Rs12-15 billion per month.

The spokesperson said that various measures including tariff rationalization, recovery drives, anti-theft campaign and system modernization were initiated. Due to these measures, the addition to circular debt is expected to be reduced to Rs130 billion in 2019-2020 compared to the target of Rs130b in the Circular Debt capping plan.

Total Circular Debt as per the definition by December 2019 stood at Rs978 billion, owed to both public and private generators, while the liabilities of PHPL payable to banks for loans taken in the past to pay generators stood at Rs804 billion, resulting in the total liabilities of Rs1782 billion.

The report in certain media sections that Circular Debt has reached 1.9 to 2 trillion is factually incorrect.

For the first time in the history of power sector, the sector has mobilized totally to fight against loss theft and corruption. This is not a weekly campaign but has been sustained for more than a year.

We are confident that immense loss reduction, theft reduction and action against corrupt elements as well as improvement in infrastructure are leading to better service delivery to the common man and that we would fulfill the targets given in the circular Debt Capping Plan.

Khalid Mustafa adds: Interestingly top mandarins Power and Petroleum Division took two days to clarify The New story but it admitted that the circular debt has soared to Rs1782 billion which is almost Rs1.8 trillion which is not right as it did not include the payables of Rs72 billion in the head of Quarterly Tariff Adjustment and if the said amount is included, then according to the figures of Power Division, it comes to Rs1854 which is again not far from Rs1.9 trillion. The clarification also admitted the inefficiencies in the power sector on the surge and it has also doubted the claims of Power Division that monthly inflows in circular debt had dropped from Rs38 billion to Rs12-15 billion.

However, The News in its story mentioned the payables of Rs990 billion and loans and liabilities parked in PHPL amounting to Rs800 billion that come to Rs1790 billion which is also close to Rs1.8 trillion, but this scribe also added Rs72 billion, a gap in Quarterly Tariff Adjustment which this government has not passed to consumers which is why the payables to some of players in the power sectors are not met and if this is included then circular debt comes to at Rs1862 billion which is close to Rs1.9 trillion.

This scribe has mentioned the round figure of Rs1.9 trillion as volume of circular debt. And it will soar more than 1.9 trillion in the months to come as the government has also barred the monthly fuel adjustment for the month of November 2019. And the monthly fuel adjustment of the month of December is also due. So The News stands by its story.