In September 2011, running defaulters owed Rs80 billion which then climbed to Rs98 billion by December 2011. PHOTO: FILE
“The amount owed by defaulters was below Rs100 billion a year ago, but due to inefficiencies and ad hoc arrangements operations of the power distribution companies (Discos) the situation was out of control and outstanding amount had jumped 100% to Rs200 billion presently,” said sources.
In September 2011, running defaulters owed Rs80 billion which then climbed to Rs98 billion by December 2011. The government had set out to recover Rs13 billion and cut the amount to Rs85 billion in January 2012 and Rs84 billion in February 2012, but the no action was taken against the elite defaulters.
An official of the Ministry of Water and Power said that Discos’ management was supposed to suspend the supply of electricity if a consumer failed to pay bills for two successive months. “But these defaulters are not paying the dues and getting free power even after receiving notices of disconnection,” the official said, adding that the running defaulters were so powerful that the government cannot touch them. Moreover, the major reason behind the circular debt, which had crippled the entire energy chain, was the unpaid dues.
The Discos had an ad hoc operation mechanism in place as seven of them had acting heads and therefore, situation of the power sector was worsening. At present, the Pakistan Electric Power Company (Pepco) is still due Rs420 billion from power consumers.
The federal government owes Rs7 billion to Pepco. Among the provincial governments, Punjab owes Rs9 billion, Sindh owes Rs61 billion, Azad Jammu and Kashmir owes Rs20 billion and Federally Administered Tribal Areas owe Rs20 billion to Pepco. The Karachi Electric Supply Company alone owes Rs50 billion to Pepco.
Furthermore, Rs30 billion was being added to the circular debt every month on account of transmission and distribution losses and other cash flow issues including lower collection, late payment surcharge to independent power producers (IPPs) and fuel adjustment surcharge.
The government said that circular debt and subsidy were draining national resources and will continue to do so it had already paid Rs1 trillion as subsidy to the power sector in the last four and half years. The subsidy had also been leading to circular debt.
Government paid Rs114 billion as subsidy in financial year 2007-08, Rs391 billion in financial year 2008-09, Rs147 billion in financial year 2009-10 and Rs346 billion in financial year 2010-11. The power sector is expected to receive Rs396 billion as subsidy this year against projection of Rs377 billion.
“The financial problem is aggravated by the large circular debt and below cost power tariffs,” an official of power ministry said.
Published in The Express Tribune, March 2nd, 2013.
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