Swelling circular debt: Power plants may shut down in 10 days

Immediate injection of Rs150b needed to keep the lights running.

Zafar Bhutta August 08, 2011
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.


Anam Aftab | 12 years ago | Reply

Its about time zardari sells some of his overseas properties and pays back our hard earned money for our electricity

InTheDark | 12 years ago | Reply

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!

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