Power ministry claims cut in circular debt LAHORE: The Water and Power Ministry claimed on Wednesday to have reduced circular debt through improved recovery and increase in payments to Pakistan State Oil and Independent Power Producers (IPPs).
However, energy experts say the debt situation improved as a result of collection of various surcharges amounting to Rs200 billion in addition to monthly electricity bills from the consumers and not owing to the ‘good management practices’.
According to a presentation shared with the media here at Wapda House on Wednesday, the ministry claimed that it improved payments to the PSO and IPPs to a great extent during the fiscal years 2014-15 and 2015-16.
In 2014, the government had to pay Rs63 billion to the PSO. But it not only cleared the dues but also made payment of Rs61bn in advance to oil company in 2015. Similarly, the government, which had to pay Rs65bn to IPPs in 2014, also cleared the amount and paid additional Rs24bn in 2015.
Similarly, the ministry claimed to have effectively capped the circular debt by reducing it from around Rs500bn to Rs330bn from October 2014 to December 2015 and onward.
It also claimed to have improved fuel stocks/supplies of Nandipur, Kapco, Hubco, Jamshoro and Muzaffargarh thermal power plants and make the peak power generation to 17,340MW so far during the ongoing year.
Experts don’t buy it, say levies somehow improved situation
“Though the government has improved payments to IPPs, PSO, it is not true that all this happened due to improving recovery, controlling line losses and other measures. The main reason behind this is the levy of various surcharges amounting to Rs200bn (over and above revenue requirement) with effect from June 12 last year,” says a former senior official of the ministry, who preferred anonymity.
“When the government took over after the May 2013 elections, everyone knows that it has promptly cleared all sorts of payments/circular debt of Rs480bn in one go. But later it couldn’t be able to do so that led to piling up the same ranging between Rs310bn and Rs330bn. So keeping this in view should we think that the government has effectively capped the circular debt or added to it after clearing the previous one (Rs480bn) in one go,” he questioned.
As the ministry claims to improve the recovery to 93.4 per cent last year, the expert disagrees with it, stating that if all is going well in this regard, why is the government not focusing on ensuring recovery from Sindh, Balochistan, Azad Jammu and Kashmir besides settling the issues with the Khyber Pakhtunkhwa to whom the government has to pay Rs18.6bn.