Energy sector circular debt soars to Rs1.6 trillion

Govt plans to upgrade transmission and distribution system

ISLAMABAD: The circulation debt of energy sector has reached Rs1,665 billion, the Ministry of Energy officials told the Public Accounts Committee (PAC) sub-committee on Wednesday.

The energy officials said that they had prepared plans to upgrade the transmission and distribution system including the reduction in circulation debt.

The plan has been approved by the Asian Bank and the World Bank, while it will be approved by the IMF tomorrow.

The PAC sub-committee meeting was chaired by Leader of the House in Senate Shibli Faraz.

The Ministry of Energy officials briefed the committee on the overall deficit of the electricity distribution companies in the country and measures taken to address it.

The session was told that credit would be taken to reduce the circular debit of the energy sector.

In the first phase, Rs100 billion will be borrowed for which a sovereign guarantee will be given. It was further said that assets had been identified to ensure the guarantee.

Government aims to introduce reforms in energy sector

The committee convener directed that the work on audit paras for the evaluation plan regarding property guarantees on circular debit be completed by December 30.

The meeting was told that under the head of electricity billing, an additional Rs229 billion from October 2018 to October 2019 had been received and the recovery process had shown an improvement by 1.13% as compared to last year.

The energy officials said that a plan had been chalked out to reduce the power distribution and transmission losses.

Under the plan, the lines will be upgraded by 2047 and 30% cars will be using electricity as fuel by 2030.

The National Transmission and Distribution Company (NTDC) officials told the committee that financing of projects for 2025 would also be finalised by June next year. After the approval of these projects, the capacity of NTDC would be increased by 90%.

Faraz said that the sole purpose of the committee was to provide cheap electricity to the consumers and control the circular debt.

The officials from the Central Power Purchasing Company (CPPA) said that the demand of electricity of 23 billion units had increased as the company used to sell 71 billion units five years ago and now was selling 94 billion units annually.

Power division secretary said that solarisation in Balochistan was not a solution to electricity crisis.

He said at present there were 39,000 registered tube wells but in reality, around 50,000 tube wells were functional using 60 horsepower motors for water pumping which was causing not just water depletion but also using enough electricity.

The secretary maintained that a fresh feasibility study would be finalised by January next year to address the power issues in Balochistan.

Committee convener Shibli Faraz stressed if the electricity was not cheap, the entire plan would fail.