Nawaz orders release of Rs104 billion for subsidy

Finance ministry blamed for accumulation of Rs401b circular debt

Zafar Bhutta May 31, 2017
Prime Minister Nawaz Sharif. PHOTO: AFP

ISLAMABAD: As circular debt swells to Rs401 billion, Prime Minister Nawaz Sharif has directed immediate release of Rs104 billion on account of subsidy pending since long to clear the debt.

Sources said, the prime minister in a meeting held on Monday, was informed that the circular debt had accumulated to Rs401 billion and one of the major reasons was delay in releasing the money on account of subsidy by the finance ministry.

Water and Power Ministry officials told the prime minister that of the total Rs114 billion pending bills on account of subsidy, the finance ministry had released only Rs10 billion, adding the ministry had to pay Rs104 billion to clear the debt.

PAC questions power ministry’s circular debt explanation

The PML-N government had cleared Rs480 billion circular debt after coming into power in 2013 and claimed to run the energy sector smoothly. But it has touched Rs401 billion again.

According to a breakdown, Independent Power Producers (IPPs) were to receive Rs123 billion on account of supplying electricity, PSO Rs150 billion, Wapda Rs30 billion and the remaining bills were to be paid to gas utilities on account of gas supply and nuclear power plants.

Moreover, Distribution Companies (Discos) were also in a worst condition because they were to receive Rs537 billion on account of power supply to consumers. The situation was alarming in Balochistan where private running defaulters were to pay Rs187 billion.

Inquiry into circular debt payments suggested

Officials said these customers were farmers who were getting power supply for running their tubewells but were not willing to pay their bills.

The officials also said the provinces were paying their bills, adding the Balochistan government was also clearing its bills and was to pay Rs3 billion, Punjab Rs4 billion and K-P Rs4 billion.

They said Sindh had been a major defaulter of electricity but it was now clearing its outstanding bills after reconciling its accounts and was to pay Rs6 billion only.


The officials said K-Electric was receiving 550 megawatt (MW) electricity from the national grid and had become a major defaulter. It was to pay Rs57 billion to the NTDC on account of electricity supply.

They said K-Electric mainly depends on power supply from the national grid, adding it put overload, resulting in tripping in the south.

Issues with NTDC

Officials said the government had appointed a managing director to the NTDC who had no experience of working of the national grid and that was why pylons had not been erected so far despite the passage of a long time.

They said due to this there was disconnection between south and north, adding that the NTDC gave different versions of tripping as head of company was not well versed with the system. Moreover, no inquiry had been held so far to find out the reasons of tripping.

The officials said during a high-level meeting, the NTDC managing director had assured the Sindh chief minister that power pylons would be repaired before the holy month of Ramazan, adding no remedy had been offered to the issue so far.


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