The legitimate questions raised by the senators were being raised in the media for many days
ISLAMABAD: The fact that circular debt has mounted to Rs321 billion in just three years has made senators angry, as was revealed at a recent meeting of the Senate Standing Committee on Finance. Senators asked how the circular debt increased to Rs321 billion as oil prices had remained low in that period, consumers paid hefty electricity bills, there was no subsidy by the government on electricity and after assuming power, the incumbent government paid Rs480 billion to independent power producers (IPPs) “without pre-audit” to clear the circular debt in June 2013. The senators claimed the payment of Rs480 billion to IPPs was made “in haste” and that it was a “world record” to pay off such a mega bill in one day — illegally — as there was no pre-audit to evaluate the IPPs’ bills of billions.
The legitimate questions raised by the senators were being raised in the media for many days after the government-IPP tussle regarding the IPPs’ claims of the amount of the circular debt. The IPPs had claimed that the power sector circular debt is Rs665 billion, which was later refuted by the Ministry of Water and Power, saying that the circular debt figure quoted by the IPPs is wrong and that it is actually Rs329 billion. The question remains as to which law allows the government to pay more than 100 per cent to IPPs whose performance did not comply with the agreements that they had entered into?
Had there been an audit of IPP bills, payments to inefficient IPPs would not have been possible. Any audit would have lowered the Rs480 billion figure as the government would have instead fined inefficient IPPs and the bills of such IPPs would have been adjusted.
Mysteriously, in June 2013, the government deliberately avoided pre-audit of IPP claims and made payments of Rs480 billion. A later audit exposed the irregularities in this amount and also revealed that the government had not recovered fines that the IPPs owed. The post-audit exposed that many bills of IPPs were “photocopies” and not originals, but the generous government didn’t bother to check these and made payments to these entities from taxpayers’ money. Now, IPPs have been emboldened to claim that a circular debt figure of Rs665 billion and deny performance audits, too. The poor taxpayers should get ready to make arrangements to pay the IPPs, even the inefficient ones.
Kismat Khan Zimri
Published in The Express Tribune, September 9th, 2016.
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