On brink of collapse: Energy crisis to worsen due to mounting circular debt

Finance ministry refuses to release Rs20 billion approved by the prime minister.

ISLAMABAD:

The power crisis is likely to worsen in the upcoming days due to mounting circular debt, which may force some other power plants to shut down, aggravating load-shedding across the country.

The Finance ministry on Wednesday also refused to release Rs20 billion, approved by the Prime Minister, saying that the ministry had not received any written directive in this regard.

Sources told The Express Tribune that the Pakistan Electric Power Company (Pepco) was to pay Rs480 billion to fuel and power suppliers.

“Thermal power plants are operating at 40% to 50% capacity, which may further drop due to non-payment of dues,” an official of the water and power ministry said.

He said that six power plants including Orient, Halmore, Saif, Saphire, Uch and Hub Power Company’s (Hubco) Narowal were shut down due to the circular debt issue.

“Pepco is to pay Rs300 billion to independent power plants (IPPs), which had grown from Rs200 billion,” IPP Advisory Council Chairman Abdullah Yousuf said. He said that power crisis will further worsen in the coming days due to circular debt which was spiralling out of control.

Meanwhile, the Senate Standing Committee on Water and Power was informed on Wednesday that there would be no relief in power outages in the upcoming season as people will be facing load-shedding of at least eight hours.

Briefing the Parliamentary panel, presided over by Senator Zahid Khan, Additional Secretary Water and Power Arshad Mirza said that financial constraints do not allow running of refined furnace oil (RFO) fired power plants at full capacity.

He said that power subsidy will touch Rs291 billion by end of June against allocation of Rs185 billion for the ongoing financial year. He said that a special bailout package of Rs20 billion was approved by the caretaker Prime Minister Mir Hazar Khan Khoso, but the government cannot afford financial bleeding for an unlimited time.

He argued that Pakistan was going against international practices with respect to energy mix as no mega hydel project had been started after the Ghazi-Barotha Hydropower Project.

“We have to fix our priorities and concentrate on coal as developing countries around the globe are giving preference to coal fired power plants. ADB has already offered financing for two blended coal thermal power plants,” he added.

He apprised the committee that at present about 9,200 megawatts (MW) was being produced, while the shortfall was 3,400MW. However due to line losses and some other technical faults, the production was further reduced by 1,800MW.

He said that ongoing load-shedding will be controlled following the release of Rs20 billion, as private companies do not provide electricity without money.

Senator Shahi Syed said that main reason for the current power crisis is non-recovery of outstanding dues.

Senator Khan said that electricity price is already high and tariff should not be increased further.

Senator Gul Muhammad Lot suggested that electricity should be provided to the industry on full cost recovery. He argued that a short-term plan may be submitted to the committee in its next meeting. He further said that the Ministry of Water and Power should take all appropriate steps to recover outstanding amount without any fear in the presence of a caretaker setup. “Brief us on your priorities in the next meeting, we should do what we can, to provide relief to the people,” he continued.

Published in The Express Tribune, April 11^th, 2013.

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