ISLAMABAD: The Power Division Thursday revealed that the country's energy sector circular debt has increased by 18 percent during the fiscal year 2019-20 to Rs538 billion from Rs465 billion in FY 2018-19.
This was disclosed by Additional Secretary/acting CEO, Central Power Purchasing Agency Guaranteed (CPPA-G), Waseem Mukhtar at a meeting of Senate Standing Committee on Power.
The meeting was initially presided over by Senator Mirza Muhammad Afridi in the absence of Chairman Senator Fida Muhammad, who joined the meeting after an hour of its commencement.
The circular debt, which was Rs1.612 trillion as of June 30, 2019 rose to Rs2.150 trillion as of June 30, 2020.
The Power Division's additional secretary further stated that circular debt recorded a growth of Rs45 billion per month of which Rs240 billion were added due to Covid-19 and Discos inefficiencies.
The claim of CPPA-G/Power Division is contrary to the Minister, Omar Ayub, who held on a number of occasions that growth in circular debt was Rs12 billion per month.
The additional secretary maintained that Rs136 billion were added in the circular debt due to Discos inefficiencies.
Of this, Rs90 billion were added during July-February 2019-2020 and Rs46 billion during March-June 2019-2020.
The Director General Nepra, Sajid Akram, informed the committee the amount of Rs136 billion would be taken as bad debt and such type of operational inefficiencies could not be recovered from the consumers.
Waseem Mukhtar said that Rs104 billion were added in the circular debt due to the Covid-19 impact, of which Rs50 billion were on account of deferment of domestic consumers bills payment, and Rs54 billion due to change in consumer mix.
There was some confusion in the committee and the Power Division on the categorization of Rs104 billion.
Senator Nauman Wazir Khattak was of the view that since this amount was part of receivables, that was why, it could not be included in the circular debt.
However, the Power Division officials' clarified that the amount was part of receivables as of June 30, 2020 that was why it was included in the circular debt.
However, as the amount is recovered from consumers during fiscal year 2020-2021, it will be excluded from the circular debt.
Nepra director general clarified that one part of circular debt was stock, and the second was flow, adding that Rs54 billion falls in the category of flow.
Mr Naveed of the CPPA-G informed the committee that according to the circular debt plan whatever hard work was done by the power sector companies, inefficiencies of Rs132 billion could not be recovered.
His claim was certified by the additional secretary Power Division.
This build up is due to Balochistan's agriculture tubewells, which add around Rs45 billion in the circular debt, Rs25 billion on account of the AJ&K and other factors.
The representative of the CPPA-G said Nepra had allowed Rs15.00 per unit with subsidy of Rs226 billion.
However, the CPP-G's electricity average price was Rs16.40 per unit for end consumers, which was sold to the consumers at Rs13.50 per unit on average.
After adjusting subsidy of Rs1.39 per unit provided by the government, still a gap of Rs2 per unit exits.
To recover this amount from consumers, which is Rs300 billion, two quarterly tariff adjustment petitions have already been filed to the Nepra, and another quarterly tariff adjustment petition was also being submitted to the regulator.
Power producers have billed Rs844 billion as capacity payment, whereas recovery from consumer was Rs640 billion.
Senator Sirajul Haq was of the view that first of all it should be resolved that if electricity was service of business.
He said, there are many categories of consumers such as farmers, household who are not allowed to use electricity as per their requirements because they do not fall in categories formulated by the Discos.
He further stated that there should be a mechanism to supply cheap electricity on priority basis to producing areas.
The issues of wheeling charges and recruitment in the Peshawar Electricity Supply Company (Pesco) also came under discussion.
The issue of recruitment was raised by Senator Mushtaq Ahmad Khan.
The Pesco chief informed the committee that the company was working with 14,000 employees against sanctioned strength of 27,000 employees in 2000.
The committee decided that a three-member penal comprising Senator Nauman Wazir Khattak, Senator Mirza Muhammad Afridi, and Senator Mushtaq Ahmad Khan (the mover) should sit with the officials of the Pesco and sort out that issue.
The committee was further informed that the cost of wind energy was Rs29 per unit, whereas the rate of solar power was Rs25 per unit in 2019-2020.
The committee expressed displeasure on the absence of secretary Power, Omar Rasul in three consecutive meetings.
Senator Mushahid Ullah Khan said that the secretary should have informed the committee in writing about his other meetings along with agenda.
Senator Nauman Wazir raised the issue of cheap electricity supply to the consumers of Karachi.
He said, the CEO, KE had acknowledged that the consumers of Karachi were supplied cheap electricity of Rs80 billion as compared to consumers of the Discos.
He suggested that either over Rs400 billion recovered from the consumers of the Discos be refunded or Rs80 billion be recovered from the KE.
Additional Secretary Power, who represents the federal government on the KE's Board, said that uniform tariff was applicable across the country but the KE had gone to the court and got stay order against the multi-year tariff, which had now been resolved.
The Director General, Nepra, Sajid Akram, supported the arguments of Senator Nauman Wazir Khattak in which he suggested that recovery of Rs80 billion should be made from the KE or same rates should be applied on other consumers of the Discos.
The Committee was briefed regarding alleged removal of domestic meters of small farmers for running mono motors on single-phase domestic connections by the GEPCO.
Points of Public Importance regarding Exact Figure of Circular Debt, Transparency in PESCO Recruitment Process were considered as well.
According to an official statement, the meeting commenced with discussion on circular debt regarding a discrepancy in the per month figure of Rs42 billion vs Rs29 billion.
Taking up Point of Public Importance regarding transparency in the recruitment process of meter readers and linemen by Pesco; the committee was informed that the testing agency had not provided a carbon copy of the answer sheet to the candidates.
During the current recruitment phase, companies were instructed to finalise the hiring by an independent testing agency after a competitive process as per the PPRA Rules in consultation with the Ministry of Energy (Power Division).
The Committee formed an informal committee to review the matter in detail.
While being briefed about the alleged removal of domestic meters of small farmers for running mono motors on single-phase domestic meters for irrigation, the committee was informed that certain consumers have got connections under domestic tariff for their Deras but they are running single-phase Mono Motors and tube wells up to 4-8 KW for irrigation of their lands.
The use of Mono Motor for agricultural purposes on domestic meters is a violation of tariff against which connection was applied and granted.
As per the SOPs, consumers have to apply for agricultural connections.
The committee directed that that matter would be taken up in detail in the next meeting and that until then all connections must be restored.
It was also stressed that agricultural policy must be revised and made more farmer friendly.
The CEO GEPCO was summoned in the next meeting.
Copyright Business Recorder, 2020
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