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ISLAMABAD: The federal government is weighing the option to deduct at source outstanding electricity amount of Rs 111 billion against federal and provincial governments, well-informed sources told Business Recorder. The cash-strapped Power Division submitted a summary to Prime Minister Shehbaz Sharif and sought his help in payment of outstanding electricity dues.

The sources said Prime Minister has directed that Federal Ministries/entities shall hold a meeting with Power Division and come up with an agreed timeline for clearance of outstanding amounts within one week and ensure timely payments in future.

The Prime Minister, sources said, has further desired that the Power Division shall have meetings with Provincial Chief Secretaries and come up with an agreed payment plan within two weeks. In case agreement cannot be reached then the Finance Division shall in consultation with the Power Division and provinces, evaluate the possibility of at source adjustment.

The Power Division time and again has intimated the top offices of government that it is unable to clear payables of generation companies, ie, IPPs and Gencos, seeking Supplementary and Technical Supplementary Grants of over Rs 200 billion, which was not supported by the Finance Division due to non-availability of fiscal space. This is the reason energy sector circular debt has reached Rs 2.5 trillion.

Power demand growth returns to normalcy

Ministry of Energy (Power Division) has ten Power Distribution Companies (Discos) under its administrative control with core business in supply of electricity throughout the country except Karachi. Apart from the private electricity consumers, the Discos are supplying electricity to various Federal and Provincial departments and organizations all over the country.

The sources maintained that Power Division has initiated a country wide recovery campaign to enhance recoveries of Discos in order to improve their financial health and to enable them to timely pay-off power purchase cost to avert unnecessary accumulation of supplemental charges which cause increase in the circular debt.

For this purpose, Power Division has approached the concerned Secretaries of Federal Ministries/Divisions as well as the Chief Secretaries of the Provincial Governments for payment against the outstanding dues indicating the huge receivables of Discos against their respective departments. Total accumulation of these arrears against Federal and Provincial Governments has reached Rs. 111 billion excluding arrears against AJ &K Government.

According to Power Division, outstanding receivables on one hand are creating cash constraints for the Discos and on the other impacting cash flow/performance of these Discos, adding that this trend has a heavy toll on performance of power sector especially in shape of ever-increasing circular debt which has severely impacted on socio-economic development in the country.

The Power Division, in its summary had proposed that necessary instructions may be issued by the Prime Minister’s Office to the Federal Ministries/Divisions and Provincial Governments for clearing their respective outstanding bills of electricity and for ensuring timely payment of electricity dues in future.

The sources said, after the issuance of instructions from the Prime Minister Office, Federal Ministries, which were previously taking payment issue as routine matter, are now approaching the Power Division for reconciliation of outstanding arrears and agreement on payment plans.

Copyright Business Recorder, 2022

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