Inter-corporate debt swells
Secretary Water and Power, Shahid Rafi, told the Public Accounts Committee in a meeting on Wednesday that the Pakistan Electric Power Company (Pepco) is again in serious trouble as inter-corporate debt has exceeded Rs300 billion.
The amount is on top of the Rs301 billion that the government has parked in a holding company and is paying Rs40 billion annual interest on it. Practically, the cumulative debt has surged to Rs600 billion, clogging the entire electricity generation and distribution system.
“The biggest defaulters should be brought to justice and I am going to request the National Electric Power Regulatory Authority (Nepra), the power sector watchdog, to revoke KESC’s licence and charge sheet it,” he said. “If KESC consumers were not paying their bills, it was not the Pepco’s fault.”
Pepco Managing Director Tahir Basharat Cheema said KESC owed Rs49 billion to it. Though the Karachi city government, Karachi Water and Sewerage Board and local bodies had to pay Rs21 billion to the KESC, it did not mean that the power supplier would not pay its dues, he said.
Cheema said the Sindh government owed Rs26 billion to Pepco, the AJK government’s arrears stood at Rs3.2 billion, military cantonments had to pay Rs1 billion, Ministry of Defence Production owed Rs1 billion, Khyber-Pakhtunkhwa owed Rs1.5 billion, Balochistan government owed Rs12 billion and Punjab government had to pay Rs9.8 billion.
He said the last time when the Sindh government paid its entire dues was in 2003. Balochistan’s dues had been outstanding for the last three years while Punjab and K-P bills had piled up for the last one year.
Common people are paying their electricity dues but the government and related departments are withholding payments.
The secretary water and power said that because of non-payments by KESC and the Sindh government Pepco has been unable to pay the bills of oil marketing companies, refineries and gas suppliers.
He said Pepco’s receivables stood at Rs130 billion and its payables amounted to Rs175 billion. The federal government had promised to release Rs131 billion at the energy summit held in Islamabad in April but it only paid Rs50 billion.
After two months, the National Engineering Services of Pakistan (Nespak) will not be in a position to pay staff salaries and may have to lay off 467 employees because of the strain caused by the circular debt, said its managing director.
He said the government owed Rs3.2 billion to Nespak by June 30. Of this, Wapda’s share was Rs650 million.
The MD Pepco said the K-P government has got stay orders from the court and is paying utility bills on the basis of 2008 tariffs. Therefore, a 60 per cent increase in tariffs since 2008 was not applicable to K-P citizens. Only on this account, the K-P government owed Rs14.2 billion to Pepco.
He said average line losses amounted to 20.3 per cent, of which four per cent was because of administrative mismanagement.
One per cent line loss amounts to Rs6.6 billion in monetary terms. The highest line losses are reported by the KESC and the Hyderabad Electric Supply Company at 36 per cent.
“It is astonishing that the federal and provincial governments are filing cases against each other and if the matter is not resolved then the Water and Power Ministry should take it to the Council of Common Interests,” Zahid Hamid, former law minister, said.
Published in The Express Tribune, September 2nd, 2010.
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