MUSHTAQ GHUMMAN
ISLAMABAD: The energy sector’s circular debt has soared to Rs 185 billion and Independent Power Producers have once again raised concerns over non-payment of their dues, well-informed sources told Business Recorder.
The government sources claim that out of the Rs 183 billion circular debt, Rs 123 billion is due for last fiscal year whereas an amount of Rs 60 billion has been added afresh in the sector’s total liability despite the fact that Water and Power Ministry is getting Rs 30 billion subsidy per month from the Finance Ministry.
The government had cleared Rs 480 dues to the IPPs end-June 2013 with a few preconditions. Sources revealed that the representatives of IPPs met with Secretary Water and Power on November 21, 2013 and expressed concerns over the gradual increase in overdues fearing that fuel supply to the plants may be stopped if the debt is not cleared.
“I guess IPP receivables have touched Rs 100 billion because payments are not being made to them due to reduction in recovery,” said an official on condition of anonymity. He maintained that IPPs got paid a few months earlier and their hue and cry is unjustified.
In reply to a question, he said, the government is conducting a special audit of 38 IPPs through Auditor General of Pakistan and three private chartered accountant firms.
The IPPs are the only corporate sector whose country risk is the responsibility of the GoP and the private power producers have no stake, he added. “Being the State, my sovereign guarantees have been called three times in the past. In any case GoP is held responsible for default,” he maintained.
He stated that neither of 38 IPPs has been bankrupted and every IPP earns an annual profit of Rs 4-5 billion.
Sources revealed that Discos recovery has declined by three percent from 89 percent to 86 percent during the current quarter, and the main reason is non-recovery from farmers. The government has fixed a flat rate of Rs 10.35 per unit for the agriculture consumers till June 2014.
According to sources, government increased power sector subsidy to Rs 250 billion from the budgeted amount of Rs 220 billion for the current fiscal year due to failure in implementing reforms like tariff rationalisation from October, 1 2013.
The government is still charging old tariff from consumers because of a suo motu in the Supreme Court of Pakistan.
Insiders claim that GoP is expected to approach Nepra for re-determination of tariff in the light of SC’s recent decision in which the apex court had stated that the government cannot withdraw subsidy as it is the right of the people.
The government had budgeted Rs 220 billion as power sector subsidy for the current fiscal year, which included: (i) Rs 150 billion to Pepco on account of inter-disco tariff differential, (ii) Rs 3 billion tariff differential for agri tubewells in Balochistan, (iii) Rs 12 billion for payment of electricity receivables from Fata, (iv) Rs 100 million on account of exchange rate differential for USAID grants to generation companies, and (v) Rs 55 billion subsidy to KESC.
Last year the government had budgeted Rs 134 billion as subsidy to Pakistan Electric Power Company (Pepco) and Rs 50 billion for Karachi Electric Supply Company (KESC), which was subsequently revised upward to Rs 264.9 billion for Pepco and Rs 84.317 billion for KESC due to government’s failure to implement required reforms in the power sector.
