Swelling circular debt: Power plants may shut down in 10 days
As fuel stocks dwindle to an alarming level, the Independent Power Producers Advisory Council (IPPAC) has warned that power plants will be forced to shut down within ten days and pitch the country into darkness if Rs150 billion is not injected into the companies who have stocks left for maximum three days.
Talking to The Express Tribune after an emergency meeting held on Monday, IPPAC Chairman Abdullah Yusuf said that the government needs to resolve the issue of outstanding dues amounting to Rs210 billion against Pakistan Electric Power Company (Pepco). He said that power plants faced frequent shut down due to shortage of fuel supply, which is supplied on a daily basis.
The country is losing 2,000MW to 2,500MW electricity daily due to non-availability of fuel supply coupled with lack of funds with the Independent Power Producers (IPPs) due to swelling dues, he said
During the meeting all the members unanimously raised concern regarding the ever-increasing overdue amounts payable to them by PEPCO which have now touched a new peak of approximately Rs210 billion as on August 8, 2011, according to statement issued by the stakeholder.
How can a system operate with heavy losses and leaks, questioned Yusuf while referring to Pepco’s 20 per cent power distribution losses and total loss of Rs170 billion last year.
Operations at Gul Ahmed Energy have come to standstill for the last three weeks due to non-payment of almost Rs3 billion payables by Karachi Electric Supply Company (KESC). Delay in payments is resulting in power producers defaulting with their banks and restricting supply of power due to non-availability of fuel.
The present outages will increase and would unduly create more hardships for the public in Ramazan if the issue is not resolved, the statement said.
The meeting members asked the newly formed committee on energy issues, headed by finance minister Abdul Hafeez Shaikh, to immediately inject at least Rs150 billion to save the IPPs from complete closure within the next few days. “Failure to do this will cause immediate shortage of electricity for the consumers,” adds the statement.
PSO near default
The largest fuel supplier to the power sector, Pakistan State Oil (PSO) is near default to international fuel suppliers as payables to all suppliers touched Rs176.68 billion. Of total payables, PSO has to pay Rs120.15 billion to international fuels suppliers including Kuwait Petroleum Corporation (KPC), sources said.
On the other hand, PSO is expected to receive Rs132.79 billion from clients including the power sector giving a picture of the cash backlog in the country’s energy sector.
Published in The Express Tribune, August 9th, 2011.
COMMENTS (16)
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Its about time zardari sells some of his overseas properties and pays back our hard earned money for our electricity
No one mentioned Zardari and his hoards of wealth... he should show his love for Pakistan and share some of his wealth with the nation in this crisis.. its useless talking about this now as everyone of us does this and are too complacent to act.. well we'll just have to react now.. sad!
if God only would have granted me ONE WISH I would have answered: Let me go out of paKistan!
The right time to start a factory for making candlesticks! It is bound to make the person who rolls out a wide enough network, and a good enough product at affordable price, very rich. But wait, where will we buy the wax from? Because ... wax ... wait a minute (sarcasm!), comes from petroleum. And petroleum is ... (more sarcasm!), imported from the Gulf. Therefore, it is expensive. Hmm. Maybe the street lights will be working. We could always huddle under street lamps. We might realise, that we are all human beings after all, and have to get on as a country. Pakistan has hollowed itself out. No one wants to bank on us. And we cannot bank on any one. Worse, no one has a bank worth its salt. Have fun.
Despite increasing the burden of consumers by hike in electricity tariffs and high average billings, why the circulation of the payments is not passed on and burden is increasing......Government resolve the problem on permanent basis
the solution is that people should be asked to pay more to contain this shortage!!this is the immediate solution
we gonna tell our kids a story once upon a time there was a electricity in pakistan
@Anwar Hasan: The ship from Turkey is going around in circles because of the circular debt.
government should not bow down to the demands of IPPs let them shutdown and then we'll see how they will survive. Whole of Pakistan is with government against this blackmail.
In regard to the subject, the people of Pakistan especially from the cities are themselves the real culprits and parasites. We are ourselves primarily responsible for all these energy crises which no government can ever handle, because fraud, cheating and bribery is treated as a cavalier delict in our society. I have seen with my own eyes how the workers of Wapda manipulate the electricity meters of households and factories and collect their monthlies! The institution of Bribery and Cheating is the Modus Operandi of the Pakistani collective thinking...............the whole corrupt system is running on the base of "MILMALA KE KHAYO"!!!!
we need to borrow money immediately to pay off default.
In the month of July 2011, there was a shortfall of about Rs 26 billion in tax collection from the target tax collection figures. Return of Income Tax for Tax Year 2011 is still not available on FBR website and Returns in some cases are due on 31 August 2011.
The whole financial team starting with FBR is in a mess and all including the Finance Minister should seriously consider their performance and may be gracefully "walk"
Circular debt is a bad debt which just cannot be serviced.Face it.!
I don't understand what exactly is happening in Pakistan. I mean when this government came into power the shortage was around maximum of 6000 but now the figures are showing the deficit of 7000. Apparently, there has been 7-8 hours of load-shedding in Lahore right now but if oil problem persists then I say it will rise up to 10 hours per day. After seeing the progress in the deficit, it reminds me of joke, forward sms, that by 2015 there will be rarely any light in Pakistan and next generation would question what exactly is light.
Been hearing these stories for quite some time, so when is this likely to happen ??? It really baffles me as to, how this companies actually function and how their actual revenue streams are managed???
what more can we expect from a corrupt, economically collapsed, internationally isolated and one of the most failed state in the world. Atleast we are top in these aspects and no India, US can beat us here. We are buying billions of dollars toys for establishment but there is no electricity in the country to feed poor hardworking citizens who pays taxes for the luxury of the rich, politicians, military and ISI. Welcome to this literally dark corner of the map.