Circular debt swells Rs40 billion in just three weeks

Reaches Rs547 billion so far in the current month

Our Correspondent June 21, 2018
'The circular debt stood at Rs507 billion on May 31, the last day of the previous government, but it increased Rs40 billion to Rs547 billion in June' PHOTO: EXPRESS

ISLAMABAD: The circular debt has grown Rs40 billion in first three weeks of the current caretaker government, reaching close to Rs550 billion.

“The circular debt stood at Rs507 billion on May 31, the last day of the previous government, but it increased Rs40 billion to Rs547 billion in June,” revealed Hub Power Company Chief Executive Officer Khalid Mansoor while briefing the Senate special committee on circular debt.

The committee, which met with Senator Shibli Faraz in the chair, discussed debt pile-up, electricity theft and load-shedding. The Hubco CEO said the previous Pakistan Muslim League-Nawaz government had paid Rs200 billion, but after that no payments were made to reduce circular debt.

Circular debt at Rs573 billion, influential people major defaulters

He pointed out that more than 30% of electricity was being generated from furnace oil in Pakistan, which was why the country’s power tariff was the highest in the region.

He disclosed that due to transmission losses, Hubco had to bear an annual loss of Rs130 billion, adding average price of electricity in Pakistan was Rs13 per unit compared to only Rs7 per unit in India.

Senator Jamal Deeni was of the view that the demand for electricity had remained constant throughout the year, but Balochistan was getting least electricity that destroyed industries in the province.

Officials of the Power Division told the committee that they had an integrated plan under which less efficient power plants would be closed down in phases. Nepra has already cancelled licences of power plants in Faisalabad, Multan and Shahdara. Saif Power CEO Sohail Haideri pointed out that gas supply to private power plants was stopped in the past, but they could not run on expensive diesel and was forced to shut the units. “In seven years, our supply was only 40%,” he said.

ECC approves circular debt settlement plan

Faraz highlighted that power sector’s debt had gone beyond Rs1 trillion, including the debt parked in a holding company, and “if we didn’t change the practice, the country will be in a big crisis.” Pakistan Electric Power Company CEO said in order to end the circular debt, improvement in governance was required.

Gas and power sector firms may be transferred to provinces

“CEOs of some distribution companies were changed six or seven times within a span of five years,” he said and asked how in such a situation things could get better. Kot Addu Power Company CEO Aftab Butt suggested that instead of providing subsidy to lifeline consumers, the government should supply them electricity from alternative sources.

Published in The Express Tribune, June 21st, 2018.

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