MUSHTAQ GHUMMAN

ISLAMABAD: The incumbent government is reportedly preparing another plan to clear energy sector’s circular debt which is hovering around Rs 525 billion mark piled due to continuous poor performance of power sector despite creation of new Ministry i.e. Ministry of Energy by clubbing together Power Division and Petroleum Division, well-informed sources told Business Recorder.

The new stock of Rs 525 billion circular debt is over and above Rs 430 billion already parked in the books of Power Holding Private Limited (PHPL) on behalf of power Distribution Companies (Discos) who are paying interest on the amount, which implies that the overdue amount against the power sector stands at Rs 955 billion.

In June 2013, the government had cleared Rs 480 billion circular debt in a controversial process which is still under discussion at different fora of the parliament. The Auditor General of Pakistan had also raised questions on the way the government opted to clear the huge amount to the Independent Power Producers (IPPs).  

The Power Division which deals with the circular debt issue with the help of Finance Ministry maintains that circular debt is in the range of Rs 430 billion to Rs 450 billion.

The sources said Independent Power Producers (IPPs) total overdue amount was Rs 228.119 billion as on January 15, 2018 of which power sector owed Rs 84.983 billion to Hubco, followed by Rs 10.473 billion of AES(Pakgen), Rs 7.771 billion of AES(Lalpir), Rs 4.195 billion of KEL, Rs 9.989 billion of Liberty, Rs 14.460  billion of Uch-1, Rs 9.036 billion of Rousch Power, Rs 5.486 billion of Habib Ullah, Rs 7.431 billion of AGL Power, Rs 8.957 billion of Hubco (Narowal), Rs 8.664 billion of Atlas Power, Rs 8.521 billion of Nishat Power, Rs 8.065 billion of Nishat Chunian, Rs 9.2 billion of Liberty (Tech), Rs 3.736 billion of Orient Power, Rs 4.536 billion of Saif Power, Rs 4.391 billion of Saphire Electric, Rs 3.837  billion of Halmore Power, Rs 7.714 billion of Uch-II, Rs 5.224 billion of Engro Power and Rs 1.451 billion of Lraib Energy.           

The power sector’s receivable are also hovering around Rs 850 billion as of November 2017 as compared to Rs 730 billion as on June 30, 2017 and every passing day is increasing the stock of receivables.

The amount of receivables against the private sector increased to Rs599 billion from Rs554.8 billion during this period as Discos have failed to expedite recovery from the private sector. The volume of billing against the private sector was Rs339.36 28 billion from July 1, 2017 till end-September whereas collection stood at Rs295.18 billion. Karachi Electric (KE) which is about to be handed over to M/s Shanghai Electric, a Chinese company, from Abraaj Group of the UAE, has dues amounting to Rs68.75 billion against 650MW electricity being taken from the national grid as of September 30, 2017 against Rs60.07 billion on June 30, 2017.

Secretary to Prime Minister, Fawad Hasan Fawad, is holding inter-ministerial consultation with the Secretaries of Finance, Petroleum Division and Power Division and Managing Director PSO for preparing a possible solution to the Cabinet Committee on Energy (CCoE) for its consideration.

Additional Secretary Petroleum Division recently informed a high-level meeting that the Petroleum Division has been making strenuous efforts to resolve the issue of delay in payments against fuel supply with Power Division.

Petroleum Division argues that apart from temporary relief, no sustainable solution has been worked out. The issue of overdue payments from power sector has reemerged. On February 7, 2015, the then Secretary Water and Power had agreed that all future supplies made by PSO would be settled under seven days credit arrangement. At that time total receivables from power sector were Rs 131 billion (excluding late payment surcharge of Rs 50 billion). For nearly one year following the seven days mechanism, regular payments were made by the power sector. However, since then the deficit has started accumulating.

According to the Additional Secretary, total receivables from power sector as of November 29,2017 have reached Rs 195.50 billion including Rs 64.40 billion generated after inception of seven days credit.