Circular debt threatens supply, say power producers

Court seeks reply from water and power ministry.

Azam Khan August 10, 2012


If payments are not made to Independent Power Producers (IPPs) to clear circular debt, load- shedding duration will increase by another three hours and twenty minutes daily, said counsel for the IPPs on Thursday at a Supreme Court hearing.

Eight IPPs have moved the apex court, seeking direction for the government to clear circular debt in the energy sector.

A three-judge bench comprising Chief Justice Iftikhar Muhammad Chaudhry, Justice Jawwad S Khwaja and Justice Tariq Pervaiz heard the case and sought a written reply from the water and power ministry regarding non-payment of funds to IPPs.

The IPP counsel said the government was also not denying the fact that circular debt has exceeded Rs400 billion and requested the court to direct the government to clear all payments.

“Clearing a total of Rs61.4 billion in outstanding dues will help ensure continued availability of electricity from the IPPs,” the petition said.

Settling payments

The counsel for the water and power ministry, Khawaja Tariq Rahim, said that in light of the court’s directions, Rs45 billion in payments to the IPPs is being settled.

Rahim said that Rs8 billion were paid to IPPs on July 23, Rs8 billion will be paid on August 30 and another Rs8 billion will be paid on September 30; a schedule is being prepared for the remaining Rs21 billion, he said.

Responding to a query, Rahim told the bench that payments are made to the private power companies under Purchase Act and fines are imposed on delays. He also informed the court that a high-powered committee was constituted to resolve the related issues.

Power theft

People protest against load-shedding across the country, but when there is power theft and people refuse to pay their bills, how would electricity be generated, the bench observed.

The court expressed its concern about theft of electricity and said that if such practices do not stop, there would be no end to the power crisis in the country.

The court did not make a final order in this regard, however, saying the Economic Coordination Committee (ECC) was an independent body and it could resolve this issue amicably at that platform.

The chief justice asked the counsel for water and power ministry to devise an effective mechanism for the payment of electricity bills.

Published in The Express Tribune, August 10th, 2012.


Nasir Mahmood | 11 years ago | Reply

Not the public, but Government itself robbing the common people by increasing electricity charges and fuel adjustments every month. There is no shortage of electricity only mis-management. Govt pays hefty fees to the lawyers but hesitate to settle the circular debt. Where ever PM visits announces development funds which should be diverted to energy sector.

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