MUSHTAQ GHUMMAN
ISLAMABAD: The country’s energy sector circular debt was Rs 547 billion in June 2018 due to low recovery, high losses, mismanagement and non technical bureaucracy sitting in the Power Division.
The stock of circular debt is over and above Rs 500 billion loans parked in the books of Pakistan Power Holding Private Limited (PHPL) and interest on these loans is being paid by consumers through surcharges.
On Wednesday, while presiding over a meeting of Special Committee of Senate on circular debt, its Chairman Senator Shibli Faraz remarked that the country’ security is at risk due to increasing circular debt. He said, energy crisis also affects exports and other sectors.
He further maintained that electricity price is increasing whereas consumers’ capacity to pay bills is shrinking every day. He said that with hike in price of electricity, the numbers of lifeline consumers is rising.
Khalid Mansoor, CEO Hubco, who is also Chairman Independent Power Producers Association, informed the special committee that public sector Generation Companies (Gencos) produce less electricity due to paucity of funds.
The special committee was further informed that out of total generation half of electricity is being produced by the private power producers.
He further stated that 30 per cent electricity is generated on furnace oil. Pakistan’s electricity prices are higher compared to regional countries.
According to IPPAC, Central Power Purchasing Agency Guaranteed (CPPA-G) owes IPPs Rs 308 billion of which Rs 82 billion belongs to Hub Power Company (Hubco). The Abbasi led administration has paid Rs 200 billion in this regard.
The country’s circular debt which was Rs 507 billion as of May 31, 2018 has now touched Rs 547 billion mark with Rs 40 billion addition in June (current month), adding that IPPs are operating within this state of affairs. Senator Shibli Faraz said that current situation could worsen.
Senator Dr. Jahanzeb Jamaldini said that electricity demand in Balochistan exists during the entire year, and industry in the province has been destroyed due to non availability of energy.
The special committee was informed that $ 35 billion projects are related to power sector under the China Pakistan Economic Corridor (CPEC). IPPAC noted that there has been a change in USA’s policy on coal-fired power projects with China the only country that supports coal-fired power plants.
The officials of Power Division informed the special committee that the government has prepared an integrated plan, according to which generation from Gencos will be graduated out in phases.
The CEO of Hubco proposed a ban on Gencos for re-engineering of machinery, proposing that generation should be handed over to the private sector.
Talking about previous regimes, CEO Hubco said that only 4000 MW electricity was added to the system from 2004 to 2013, adding that electricity crisis affects the country’s GDP negatively. He said Pakistan’s transmission losses are 19.6 per cent which are the highest in the region. The national economy faces Rs 130 billion per annum financial losses due to higher transmission losses.
According to CEO Hubco, average price of one unit of electricity is Rs 13 in Pakistan whereas in India one unit costs Rs 7.
He said, IPPs are obligated to pay additional interest to banks on loans due to late payment but the government is not ready to pay the additional interest. He said Chinese investors have raised objections on Late Payment Interest.
“We have requested the Finance Minister to resolve this issue, otherwise, China can back out from investment as per the agreement,” he continued.
CEO Saif Power Sohail Haidari said that electricity generation was affected in the past due to change in gas supply to the IPPs, adding that IPPs shut down their plants due to expensive diesel. He further stated that IPPs dispatch remained less than 40 per cent during the last seven years.
The Power Division’s official apprised the special committee that furnace oil-fired electricity generation is being graduated out, adding that Nepra has scrapped generation licences of Faisalabad, Multan and Shahdarah power plants.
Chief Executive Officer (CEO) Kot Addu Power Company (Kapco) Aftab Butt proposed that lifeline consumers should be provided electricity from alternate sources instead of extending them a subsidy.
Senator Shibli Faraz said that petroleum mafia exists in Pakistan. The country and economy have been kept on a ventilator and Nepra is trying to regulate power sector but is not successful in doing so. He said the government has to take measurers on a war footing to deal with circular debt challenge so that the country’s economy may be supported.
The meeting was also attended by the officials of National Electric Power Regulatory Authority (Nepa), and Private Power and Infrastructure Board (PPIB).
