According to the Ministry of Water and Power, the subsidy amounting to Rs 176 billion was pending with the Finance Ministry, and claims for the subsidy had already been submitted to Finance Ministry. The Prime Minister was informed in a high level meeting held on April 18 that Ministry of Water and Power had approached the finance division for payment of remaining amount of subsidy allocated for power sector in budget 2016-17.It was informed that finance division had agreed in principle to provide it.
Presently, the energy sector is facing a liquidity crunch due to mounting circular debt and the consumers are facing prolonged power outages which has led to replacing the Power Secretary. The government had claimed to end power outages in 2018 but recent power outages have exposed the tall claims of the government and the ruling party is facing adverse criticism from opposition political parties that have launched an anti government campaign.
The government had allocated Rs 118 billion subsidy for power consumers in the budget 2016-17 which was 0.3 per cent of GDP. As against this, Rs 676 billion was earmarked for subsidies in financial year 2012-13 which was 2.4 per cent of GDP. As a result, subsidy amounting to Rs 104.4 billion relating to AJK, KE, FATA accounts and for industrial support remained unpaid. Power Secretary in a high level meeting held on April 10 had requested the Prime Minister to direct Finance Ministry to release the amount of pending subsidy immediately keeping in view the liquidity crunch.
Pakistan State Oil (PSO) receivables touched Rs 300 billion mark and Petroleum Ministry laid the responsibility on the power ministry as power distribution companies had failed to clear dues from the current bills to power producers to make payment onward to PSO. However, power ministry has laid the responsibility of power crisis on the finance ministry which failed to clear the subsidy allocated in the budget. Pakistan State Oil (PSO) is facing financial collapse due to non-payment of dues by its clients mainly the power sector and has already issued warnings to the federal government for disruption in oil supply. According to finance ministry, circular debt stood at Rs 329 billion as on April 5, 2017. Ministry of Water and Power holds National Electric Power Regulatory Authority (Nepra) responsible for growing circular debt.
Ministry of Water and Power argues that due to differences between Nepra''s assumed recoveries and actual recoveries by Discos and higher line losses than those allowed by Nepra, circular debt have surged from Rs 320 billion in October 2014 to Rs 374 billion in December 2016. This, sources argued, is the reason Water and Power Ministry did not notify Discos determined tariffs and even directed Discos to get stay orders from the courts and when this issue was raised by the International Monetary Fund (IMF) the staff was informed that the matter is in the courts.
Copyright Business Recorder, 2017