Abnormal power tariff hikes fail to bring down Pakistan’s circular debt

ISLAMABAD-The abnormal hike in base electricity tariff and the highly publicised anti-theft drive have failed to control the power sector circular debt or the losses of distribution companies which have increased by 13.47 percent and 26 percent, respectively, during July to October of 2023.
The power sector circular debt has climbed to Rs2,611 billion, while the losses/ inefficiencies by the distribution companies have enhanced by 26.22 percent to Rs77 billion during July to October 2023 as compared to Rs61 billion during the same period last year, official documents reveals. The receivables of the federal government from K-Electric have also reached to Rs389 billion in October 2023, which were pending due to subsidy dispute between KE and the Government of Pakistan, the documents said.
The circular debt accumulation has recorded an addition of Rs301 billion, which is Rs52 billion (13.47 percent) higher than Rs249 billion accumulated during the same period last fiscal year, it said. The power sector circular debt was Rs2,310 billion on June 2023, which has climbed to Rs2,611 billion during the first four months of the ongoing fiscal year, the documents noted. Payable to IPPs have increased to Rs1,750 billion in July to October period from Rs1,617 billion during the same period last fiscal year. Similarly, payable to Gencos fuel suppliers increased from Rs91 billion to Rs96 billion during the time. However, the amount parked in GHPL has reduced to Rs765 billion from Rs793 billion during July to October 2022.
The under recoveries of the Discos have also raised during the July to October 2023 period reaching to Rs165 billion from Rs163 billion during the same period last year. The inefficiencies/losses of the Discos jumped by Rs16 billion to Rs77 billion during the same period last year. The increase in losses and under recoveries is a serious question mark on the performance of the Power Division and its highly publicised anti-theft drive started on September 7, 2023. As per the data, Rs74 billion were accumulated in the circular debt only in the month of October.

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