ISLAMABAD - The circular (inter-corporate) debt has once again mounted to over Rs 225 billion due to slow bill recoveries and high power losses that created the problem of cash flow, after government had cleared the previous ‘overdue’ bills of both the public and private electricity producers.
The Pakistan Muslim League Nawaz (PML-N) government had already cleared long-lasting circular debt of Rs 480 billion within 45 days after holding the charge on June 5 2013. However, the debt has once again start accumulating due to the flaws in entire power system of the country. The debt is mounting primarily due to delay in payments and unresolved power sector issues, including the disparity between the cost of power generation and the amount charged, poor recovery by distribution companies and electricity theft.
Sources informed that bill recoveries have reduced to 82 percent from earlier 85 percent apart from increase in power losses from 16 to 20 percent creating cash flow problem. Similarly, he said that power dues of provinces have reached to around Rs 220 billion. Therefore, the debt has gone beyond Rs 220 billion level.
“Inter-corporate debt has swelled to over Rs 225 billion and of the total, the amount owed to the IPPs is Rs160 billion”, said Abdullah Yousaf, IPPs (Independent Power Producers) Advisory Council chairman while talking to The Nation on Monday.
Meanwhile, another top official of an IPPs said, “It seemed that the government after clearing the earlier debt was paying no more attention to the issue, which once again was going to become a nuisance for the power producers”.
He blamed the government’s failure to cut the transmission and distribution inefficiencies and losses and theft amounting to one-third of the country’s total power productions, poor recovery of the unpaid bills of more than Rs500b from defaulting consumers, etc. for the rapid growth in their unpaid bills.
The Nation has tried to contact adviser and official spokesperson of the Finance Ministry Rana Asad Amin to take his comment on this issue, but he was not available to comment.
According to the Finance Ministry documents, the government had settled the earlier power sector circular debt worth of Rs 480 billion in two phases, as in first phase Rs 342 billion were cleared on 28th June 2013. The breakup of Rs 342 billion revealed that the government has issued Pakistan Investment Bonds worth of Rs 128 billion, Rs 135 billion was saved from cutting expenditures, Rs 20 billion from dividends recover from Public Sector Entities (PSEs) and Rs 59 billion was drawn from consolidated fund for clearing the circular debt. Meanwhile, in the second phase, the government has cleared remaining Rs 138 billion on July 21 2013. Non-cash settlement of Rs 138 billion with PSEs, as Public Sector Entities owned Rs 134 billion to government. Therefore, the government has spent only Rs 4 billion.