The most consistent feature of the entire energy chain in the past many years has undoubtedly been the circular debt. The official toll is hardly ever known, because the relevant ministry does not anymore find it important enough to make any details public. But the figure making rounds is north of Rs700 billion and rising.
Fresh from the embarrassment of losing the case against the IPPs amounting to Rs14 billion, another challenge is now presented to the government.
The Independent Power Producers Association (IPPA) has brought in the government’s notice of the outstanding dues in excess of Rs195 billion. The body represents 20 IPPs with a capacity of 5910MW, and does not include another 2366 MW. Safe to assume, the remaining IPPs would also have receivables close to Rs80-90 billion.
Not that the structural issues surrounding the circular debt file have changed or intensified. In fact, the winter demand should allow a breather in terms of stockpile. The structural issues remain where they were, and no permanent solution is in sight. Stop gap measures are what the incumbent government has mostly gone back to, and that kept bringing complacency towards addressing the root of the issue.
The near paralyses in Islamabad now means that the power sector is now even deprived of the stop gap fixes. Recall that it was the Finance Minister Ishaq Dar who would take the centre stage in all affairs relating to power sector dues.
That was never the ideal situation, but it still kept the boat sailing even in troubled waters. The fugitive Finance Minister is no more in action, despite clinging on to the office, and that has caused extensive delays in clearing payments to the power producers.
Further complicating the matter is the delaying tactics by the FBR when it comes to GST refunds on electricity. Recall that Dar had adopted such a policy which was aimed at showing higher revenue collection merely by delaying tax refunds. Whether Dar’s absence is contributing more to the situation is unclear, but he remains at the core of the issue.
Forget about surplus power, Pakistan may even see power shortage in winters and that will surely not make a pretty reading. The IPPs have once taken the route of international arbitration, and there is no reason why they won’t take the same route again. The buck needs to stop somewhere, and if Dar is so central to the entire structure, he must be here running the show. If there are alternatives available, now is the time to showcase them. Status quo is not an option.
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