Circular debt reaches Rs2.28 tr, NA body told

ISLAMABAD: The Standing Committee on Power on Monday was informed that circular debt has reached Rs2.28 trillion during the fiscal year 2020-21, mainly due to the unpaid government subsidies which have resulted in the accumulation of debt on distribution companies.

The committee, chaired by Chaudhry Salik Hussain, discussed the circular debt and other issues. The ministry reported that the circular debt has doubled despite an increase in the tariff since July, 2018. It was further told that power tariffs were determined by Nepra. Tariffs for Power Generation Companies were governed by power purchase agreement, which defined the base tariff for power generation as well as the process for subsequent adjustments. Tariffs revision was thus automatically reflected in power purchase prices. Nepra only validates the past claims of power suppliers.

Chairman of the Standing Committee Chaudhry Salik Hussain observed that it was a high time, the agreements should be re-negotiated with IPPs and the consumers should be given relief in the electric bills. He said that the resolution of circular debt was necessary as this would ease supply constraints.

The committee members suggested that recovery might be done through the revenue department and incentives could be given on recoveries. The committee also set up four members’ sub-committee under the head of Lal Chand to discuss and recommend for resolving the issues faced by the legislators with respect to Karachi Electric Comply (KE), DISCOs and GENCOs of Sindh.