Problem of circular debt: energy panel told to submit report on October 12

Prime Minister Syed Yousaf Raza Gilani on Tuesday directed the inter-ministerial committee on energy sector to submit report with respect to resolving the problems of circular debt to the special meeting of the Cabinet likely on October 12 that would also be attended by chief ministers, it is learnt.
Sources said that the Prime Minister decided to convene the meeting of special cabinet after receiving a detailed briefing from inter-ministerial committee on energy sector headed by Minister for Finance Dr Abdul Hafeez Sheikh. The Chief Minister of the provinces would also be invited to attend the meeting as the committee reportedly informed the Prime Minister that line losses, recovery issue and power theft were major factors behind the circular debt and provincial help is critical for implementation any plan to resolve the problems. The solution of these issues, an official said could bring down the subsidy for power sector to Rs 77 billion.
The total impact of subsidy for power sector on account of tariff differential was worked out at Rs 77 billion with maximum impact of Rs 41 billion subsidy on budget for the consumers using up to 100 units followed by Rs 22 billion for consumers using up to 50 units. The subsidy of Rs 6.12 billion is involved for the consumers using from 101 to 300 units. However, impact of subsidy was massive on the budget due to inability of relevant departments to minimise line losses, theft and to recover the bills.
High ups of Finance Ministry believe that settlement of circular debt was only a symptom and the problems in power sector could not be done away without addressing the core issue of inefficiency involved at various levels of distribution and generation companies.
The provincial help would be critical for implementation of any plan against theft and full recovery of bills. The figures finalised by the inter-ministerial committee with the help of all the stakeholders indicate that maximum subsidy of Rs 63 billion was being given to 3.4% and 8.9% consumers using 50 units and 100 units monthly respectively.
About 22.03 percent consumers in the country have been using up to 300 units, 6.2 percent up to 700 units and 3.9 percent above 700 units per month who have been getting very nominal subsidy of total Rs 7.5 billion annually. The estimates suggest that commercial consumers stood at 7.8 percent, industrial 26.2 percent and agricultural consumers stood at15.5 percent.
The high ups of Finance Ministry reportedly informed the Prime Minister about the serious repercussions the losses and inability of distribution companies to recovery full electricity would have on the budget. Moreover, the high ups of Finance Ministry have also said to be attributed 15.5 per cent agriculture consumers as overstated and wanted action against those who have been unfairly getting benefit from the facility.