ISLAMABAD: The circular debt in the power sector has further increased by Rs116 billion in the last three months of the financial year 2020-2021, which was stood Rs2,150 billion till June 30, 2020, a parliamentary panel on Monday was informed. The secretary Power Division gave a briefing to the Public Accounts Committee (PAC) on growing circular debt in the power sector while, the committee was examining the audit report of the Ministry of Energy (Power Division) for the year 2019-2020. Rana Tanveer chaired the meeting of the PAC.
The committee showed its serious concerns over growing circular debt in the power sector despite that the present government raised power tariff five times and claimed that it would arrest the debt by Dec 2020. The committee was informed that the total size of circular debt till now was around Rs2,266 billion including Rs700 billion payment to the Independent Power Producers (IPPs). The committee was informed that the size of circular debt had doubled in last two years, since the PTI government took over.
Secretary Power Zahoor Hussain Qureshi said the overall circular debt doubled in the last two years.
In 2018, its size was Rs1,415 billion, which increased to Rs2,150 billion by end of financial year 2019-2020. An increase of around Rs116 billion was witnessed in the last three months.
In first half of FY 2020, the Power Division official said Rs243 billion was added to the circular debt. Again, an increase of Rs294 billion was seen in second half of the FY 2020.
Earlier, Rs288 billion increased in first half of FY 2018-19. Whereas, the second half of same financial year, an increase of Rs198 billion was registered.
The secretary said various factors involved in surging the circular debt. He maintained that Balochistan government had to recover Rs283 billion from the farmers, a subsidy on tube wells. The share of federal government in the subsidy was 40 percent, and rest 60 percent was of Balochistan Government. He further said agriculture consumers in the provinces were also not depositing Rs 10,000 fixed amount of the subsidy.
The secretary further told that power was being supplied to the AJK government on subsidized rates. Around 650 MW power was being supplied to K-Electric which was unable to recover its receivables.
The committee chairman remarked that the government failed to seize the growing energy circular debt, despite raising power tariff five times. The committee members from opposition parties alleged that the recently inked agreement between the government and the IPP was faulty.
Rana Tanveer alleged that the government had not only written off Rs900 billion receivable against the IPPs but also gave them assurance to pay additional Rs400 billion.
He said this additional payment to the IPPs would be another burden on the consumers.
Committee member Naveed Qamar said the present government had claimed that they had taken measures to seize the circular debt by Dec 2020 from further growing. He said it was related to management not power theft.
He maintained that the circular debt would be paid off through levying circular debt tax, power tariff increase or addition in annual budget, and ultimately public had to bear the burden.
Khawaja Asif said in Balochistan subsidized electricity was being supplied to marriage halls.
He suggested that power supply should be suspended where bills were not cleared timely.
Copyright Business Recorder, 2020
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