By Staff Reporter
ISLAMABAD: Pakistan paid Rs142 billion to more than 100 independent power producers to settle some overdue bills and ease the burden of the power sector’s circular debt, the energy ministry said on Wednesday.
The payment, approved by cabinet’s Economic Coordination Committee, was part of the government’s efforts to reform and improve the energy sector, as required by the International Monetary Fund under a $3 billion loan deal agreed last week.
The power sector’s circular debt, which refers to the cash flow shortfall across the entire power supply chain from generation to distribution, had reached Rs1.77 trillion by the end of May, up by Rs420 billion since July last year, according to the ministry.
Last year, the government had paid Rs385 billion to independent power producers.
The latest payment was distributed among 109 producers, with coal-based generators getting the largest share of Rs44.68 billion, followed by those using re-gasified liquefied natural gas with Rs39.45 billion, and residual fuel oil with Rs20.9 billion.
Other sources included natural gas, nuclear, hydel, wind, solar and bagasse.
The biggest recipient was National Power Parks Management Company Private Limited, which received two payments totaling Rs22 billion , followed by Huaneng Shandong Ruyi Energy (Pvt) Ltd with Rs10 billion and China Power Hub Generation Company (Pvt.) Ltd with Rs9.21 billion.
Some of the producers had warned of shutting down their plants due to non-payment of dues, such as Port Qasim Electric Power Company Ltd, which received Rs8.317 billion, and Engro Powergen Thar (Pvt) Limited, which received Rs4.31 billion.
Power sector circular debt rose by Rs394 billion in the first 11 months of the last fiscal year of 2022-23, despite tariff hikes and subsidy payments.
The circular debt was estimated to reach Rs2.681 trillion by the end of June, based on the average monthly accumulation of Rs35.82 billion.
The government had increased the base tariff by Rs7.9 per unit, as part of its agreement with the IMF, and is preparing to raise it further.
The main drivers of the circular debt were the losses and inefficiencies of the power distribution companies, along with low bill recoveries, which added Rs374 billion to the debt stock, accounting for 95 percent of the total increase.
The distribution companies’ losses and inefficiencies amounted to Rs125 billion, while low bill recoveries added Rs249 billion during July-May 2022-23. Additionally, Rs171 billion was attributed to quarter tariff adjustments and fuel charges adjustments. The remaining Rs128 billion was provided through fiscal space.
Last month, the government released Rs117 billion in outstanding subsidies. The receivables from K-Electric, a Karachi-based privatized utility, amounted to Rs456 billion in May, with an additional Rs57 billion accumulated during the 11 months. These receivables are pending due to a subsidy dispute between K-Electric and the government.
Copyright © 2021 Independent Pakistan | All rights reserved
