- Pakistan’s power sector circular debt stock crosses Rs 2.6 trillion
ISLAMABAD: Pakistan’s power sector circular debt stock crossed Rs 2.6 trillion by October 31, 2023, showing 13 percent or Rs 75.25 billion per month growth in its flow as anti-theft and recovery drive failed to give results as per expectations.
According to sources, circular debt stock touched Rs 2.310 trillion at the end of FY 2022-23, with has now reached Rs 2.611 trillion during July-October 2023-24 with a growth of Rs 301 billion against growth of Rs 249 billion in same period of 2022-23.
Payables to power producers have reached Rs 1.750 trillion during four months of CFY from Rs 1.434 trillion at the end of FY 2022-23, showing an addition of Rs316 billion. The stock of payables to IPPs was Rs 1.750 trillion during July-October 2023-24.
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However, Gencos’ payables to fuel suppliers have declined to Rs96 billion from Rs 111 billion in FY 2022-23 and posted Rs 5 billion growth during July-October 2023-24 from Rs 91 billion in the comparable period of 2022-23. No change was witnessed in Rs 765 billion parked in Power Holding Limited (PHL). PHL parked amount was Rs 793 billion during the same period of 2022-23.
Key reasons for the substantial growth in flow of circular debt are issues of K-Electric (KE), AJ&K, release of subsidies, delay in implementation of QTA adjustments, higher interest payments, rupee dollar parity etc.
The sources said, Rs 389 billion is receivable from KE as on October 2023 – pending due to subsidy dispute between the power utility company and the federal government.
According to sources, the amount of budgeted but unreleased subsidies was recorded at Rs 8 billion during the first four months of current fiscal year against Rs54 billion in the comparable period of 2022-23.
IPPs interest charges on delayed payments of PHL and IPPs recorded at Rs 45 billion in four months of current fiscal year against Rs 54 billion in the same period of 2022-23.The amount of IPPs interest charges on delayed payments was Rs 143 billion during the entire fiscal year 2022-23.
Pending generation cost (QTAs + FCAs) stood at Rs 110 billion against Rs 103 billion during the same period of 2022-23 and Rs 250 billion in FY 2022-23.
Non-payment by K-Electric reached Rs 43 billion in July-October 2023-24 against Rs65 billion during the same period of FY 2022-23.
The sources said Discos’ losses, inefficiency stood at Rs 77 billion during July-October 2023-24 as compared to Rs 65 billion in the same period of 2022-23, showing addition of Rs 16 billion in total circular debt stock.
Discos’ under recoveries reached Rs 165 billion during first four months of 2023-24 as compared to Rs 61 billion during corresponding period of 2022-23; however, their cumulative under recoveries stood at Rs 236 billion as of June 30, 2023. Other adjustments (prior year recovery, etc.) were Rs147 billion during July-October, 2023-24 against Rs 254 billion in July-October 2022-23.
Sharing details on payment through fiscal space, the sources said, in CY 2022-23 PHL principal repayment were negative Rs 35 billion whereas stock payments stood at negative Rs 127 billion totaling to negative Rs 162 billion.
The sources further stated that payables to power producers increased by Rs 5 billion due to withdrawals by FBR in April 2023.
Officials argue that the main reason for the increase in circular debt was slow submission of claims of FCA and QTAs to the Finance Ministry, adding that the current financial year will close at zero growth in flow of circular debt.
