Power sector''s circular debt has reached Rs 750 billion of which Rs 421 billion falls squarely in the government''s definition of circular debt whereas Rs 327 billion is parked in the books of Power Holding (Private) Limited (PHPL), well informed sources told Business Recorder. The stock of circular debt is 20 percent higher than the maximum stock of Rs 350 billion agreed with the International Monetary Fund (IMF).
The sources said Finance Division was not taking any policy decisions due to the prolonged absence of Finance Minister Senator Ishaq Dar. Power Division, sources said, is pursuing the Finance Division for release of Rs 22 billion subsidy but no decision has been taken in the Division due to the absence of the Finance Minister.
Pakistan State Oil (PSO) supplies furnace oil to two Independent Power producers (IPPs) notably Hub Power Company (Hubco), Kot Adu Power Company and public sector generation companies (Gencos).
According to IPPs, the verified and audited overdue amount of 20 IPPs of 5910 MW have crossed Rs 195 billion excluding overdue amount for the remaining IPPs of approximately 2366 MW whereas overdue amount of PSO was Rs 181 billion, totaling to Rs 376 billion. However, PSO claims that its total outstanding amount against power sector was Rs 267 billion as of November 15, 2017 which is far higher than the government estimate.
"We cannot slash the amount of circular debt until full cost recovery is ensured at the retail level," the sources added. Giving reasons for more than 20 per cent increase in well defined circular debt, the sources said that basically the amount of Net Hydel Profit (NHP) as determined by National Electric Power Regulatory Authority (Nepra) has been built on generation tariff on quarterly basis but not billed in the consumers'' end tariff.
"Tariff is based on two parts (i) monthly adjustments and (ii) quarterly adjustments. Nepra determines monthly tariff every month whereas quarterly tariff was finalised recently. Wapda has started billing CPPA as per new rates but NHP recovery has been nil from Discos which is the main reason for the build up of circular debt," the sources maintained. Currently, power sector, sources said, is facing liquidly crunch, which is expected to be sorted out within a couple of months.
The sources said the government has not stopped furnace-oil based power generation but implemented the Prime Minister''s directive to the Power Division to reduce furnace oil generation. "Presently we have enough generation from natural gas, LNG and hydel sources, which is why we have reduced generation from furnace oil plants which are being run on merit," the sources stated.
Copyright Business Recorder, 2017