Power ministry holds NEPRA responsible for Rs393b in circular debt

Admits debt in the energy chain has swelled despite clearing Rs480b in 2013

ISLAMABAD: The Ministry of Water and Power has acknowledged that circular debt had swelled to Rs393 billion in the energy chain and held the National Electric Power Regulatory Authority (Nepra) responsible for the mounting burden.

This negates the government’s claim that it has been running the energy sector smoothly after clearing Rs480 billion in circular debt immediately after coming to power in mid-2013.

As almost four years have passed, there appears to be no difference as the circular debt has again piled up, standing at Rs393 billion now.



The Independent Power Producers Advisory Council (IPPAC), a lobby group of private sector electricity producers, however, argues that the circular debt has in fact ballooned to Rs414 billion. The power ministry does not accept the figure and terms it fake.

Briefing a sub-committee of the Senate Standing Committee on Water and Power on Thursday, which was chaired by Nauman Wazir Khattak, Water and Power Secretary Younus Dagha categorically said the government would not be able to cope with the circular debt unless and until 100% recovery of electricity bills was ensured.

He said the IPPAC had no value and the figure given by the body was not authentic. The government had individual agreements with the power producers and the circular debt stood at Rs393 billion, he said.

Dagha blamed Nepra for the swelling debt, pointing out that the tariff determined by the regulator had added Rs150 billion to the burden.

He argued that the regulator wanted the power companies to recover consumer bills like the way California did, but it was not possible in Pakistan.

However, he insisted that the Ministry of Water and Power had made efforts - including controlling transmission and distribution losses and stepping up recoveries - to improve the situation, which led to savings of Rs116 billion.



“Circular debt cannot be wiped out unless the power sector is given actual subsidy in the budget and a realistic tariff is set by the regulator,” he remarked.

Committee Chairman Nauman Wazir was of the view that advertisements about mounting receivables given by the independent power producers (IPPs) in the media tainted image of the country.

The committee called IPP representatives in the next meeting to determine the facts.

Wazir gave assurances that the committee would bring the dispute to a logical end by knowing the facts and determining who was misleading about the debt level. He also told the power ministry to present details of agreements signed with the power companies.

About the energy mix in power generation, Dagha said his ministry was working on it but it was unable to provide details at the current stage. He sought six months’ time to prepare the details for submission.



Work on improving the energy mix by relying more on cheaper power sources like hydel electricity started in 2010 and an international consultant had been invited to give its input.

Taking up the delay in commissioning of the Nandipur power plant, committee members held the then law minister and law secretary responsible.

They called the delay a criminal act that caused a loss of Rs113 billion. They summoned former law minister Dr Babar Awan in the upcoming meeting slated for March 20 to find out the reasons behind the delay in giving legal advice on sovereign guarantees.

The committee chairman noted that the Ministry of Law took four years to come up with the legal advice, but it was issued in just one day after the intervention of chief justice of the Supreme Court.

Published in The Express Tribune, March 17^th, 2017.

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