Circular debt stands at Rs2,253b till end-Sept

ISLAMABAD: The monster of circular debt for the cash bleeding power sector has escalated to new heights and stood at Rs 2,253 billion till end-September 2020, it is learnt.

The circular debt has surged by Rs 102 billion during the last quarter (July-September) of the current fiscal year 2020-21, so the government claims to bring it down have gone down into drain. In a bid to comply with the instructions of the Cabinet Committee on Energy (CCOE), the Power Division placed a new reporting format for calculating the circular debt. According to details, the circular debt stood at Rs 1,612 billion on June 30, 2019 and went up to Rs 2,150 billion till June 30, 2020. The circular debt increased by Rs 57 billion in July 2020 and stood at Rs 2,208 billion. In August 2020, it went up by Rs 29 billion and escalated to Rs 2,237 billion. In September 2020, the monster of CD increased by Rs 16 billion, so the total outstanding amount surged to Rs 2,253 billion.

Out of total outstanding piled up amount of circular debt to the tune of Rs 2,253 billion, the payable amount to IPPs increased to Rs 1,134 billion till September 2020 against Rs 708 billion by June 2019. The outstanding amount payable to IPPs continued ballooning to Rs 1,038 billion till June 2020. It further increased to Rs 1,086 billion in July 2020, Rs 1,118 billion in August 2020 and Rs 1,131 billion in September 2020.

The payable by GENCOs to fuel supplies, the outstanding amount ballooned to Rs 112 billion till September 2020. This outstanding amount stood at Rs 95 billion on June 2019 that increased to Rs 105 billion till June 2020. The amount parked in the Power Holding Company stood at Rs 1,007 billion on September 30, 2020 against the outstanding amount of Rs 810 billion on June 2019. This outstanding amount of PHPL increased to Rs 1,007 billion till June 2020.

The DISCOs (distribution companies) losses/inefficiencies caused losses of Rs 42 billion in the financial year 2019-20 but it stood at Rs 16 billion in July 2020, Rs 8 billion in August 2020 and Rs 1 billion in September 2020.

The DISCOs under recoveries caused losses of Rs 199 billion in the financial year 2019-20 and this cash bleeding continued as it caused losses of Rs 26 billion in July 2020, Rs 19 billion in August 2019 and Rs 6 billion in September 2020.

The unpaid subsidies amount is escalating as it caused losses of Rs 135 billion in the last fiscal year 2019-20. This loss stood at Rs 21 billion in July 2020, Rs 21 billion in August 2020 and Rs 23 billion in September 2020. The subsidies amount is under verification.

The IPPs interest charge on delayed payments stood at Rs 55 billion in last fiscal year as it increased by Rs 19 billion in the first quarter of the current fiscal year. The PHPL mark-up stood at Rs 70 billion in the last fiscal year and it added Rs 22 billion in the first quarter of the current fiscal year.

The pending generation cost (quarterly adjustment and fuel adjustment) increased losses to the tune of Rs 270 billion in the last fiscal year and continued to cause further loss of Rs 18 billion in July 2020, Rs 46 billion in August 2020 and Rs 26 billion in September 2020.

The non-payment by K-Electric stood at Rs 77 billion during the last fiscal year while the outstanding amount further ballooned by Rs 6 billion in July 2020, Rs 9 billion in August 2020 and Rs 7 billion in September 2020.

Other adjustments showed that the losses stood at Rs 309 billion in the last fiscal year and added Rs 46 billion in July, Rs 74 billion in August 2020 and Rs 64 billion in September 2020. According to an official statement, a meeting of the Cabinet Committee on Energy (CCOE) was held under the chairmanship of Federal Minister for Planning, Development and Special Initiatives Asad Umar here in Islamabad on Thursday. The committee reviewed the Circular Debt Reporting Format developed by the Power Division in consultation with the NEPRA while approving the format, the CCoE directed the Power Division to work out detailed projections and mitigations strategies for the circular debt besides monitoring the implementation progress of the reform measures to minimize the circular debt buildup in the power sector.

The Competitive electricity market introduction plan was also presented to the CCoE and it was decided that the Power Division will present a detailed analysis of the market model and institutional reforms plan along with the timelines to the CCoE for its approval. It was agreed that an efficient competitive wholesale market, that will reduce the cost of power for the customers, will be considered for implementation in the shortest possible time.

The meeting was attended by Minister for Energy Omar Ayub Khan, Federal Minister for Information and Broadcasting Shibli Faraz, Federal Minister for Industries and Production Hammad Azhar, Federal Minister for Maritime Affairs Ali Haider Zaidi, Advisor to Prime Minister on Finance Abdul Hafeez Sheikh, SAPM on Petroleum Nadeem Babar, SAPM on Mineral Resources Shahzad Qasim and official of various divisions.