Circular debt breaks all barriers, touches record Rs922 billion

ISLAMABAD: The nightmare of Pakistan’s energy circular debt continues its upward surge, as it broke all records to touch Rs922 billion by end-November 2017.

In a report given to the Parliament by the Ministry of Finance, it presented the circular debt amount to be around Rs472.678 billion, reported Dawn.

An anomaly, however in the figure remained unaccounted for was the Rs450 billion debt separately placed in Power Holding Private Limited (PHPL), which is a subsidiary of the power division.

PHPL was constituted to obtain funds from commercial banks and is supported by financing from surcharges collected from consumer tariff in the electricity bill.

The Minister of State for Finance Rana Muhammad Afzal Khan stated amount of circular debt Rs472.68 billion payable to power generators wasn’t included in the annual State Bank of Pakistan report of 2016-17.

The central bank report only highlighted the long-term loans payable by groups of foreign and local financial institutions.

According to the finance ministry, payable to oil and gas sector stood at Rs103 billion, of which Rs89.4 billion were owed to Pakistan State Oil (PSO).

Also, the report mentioned payables to Hub Power Company stood at Rs70 billion in November 2017 and dues owed to Kot Addu Power rose significantly to Rs73 billion by above-mentioned period.

Power bills owed to AES, touched Rs19 billion against Rs11 billion four years ago.

The finance ministry’s report put the payables to oil and gas sector at Rs103bn, including Rs89.4bn to Pakistan State Oil (PSO). The dues to oil and gas companies had stood at Rs71bn in December 2013.

Total payables to independent power producers (IPPS) touched Rs288 billion this year compared to Rs270 billion in 2013.

And dues to Wapda Hydro and others were said to be around Rs52 billion this year against Rs138 billion four years ago.

Since clearing Rs480 billion of circular debt when the current govt came into power, the total amount of circular debt amassed stood at Rs472 billion by end-November 2017.

As such, the total fresh flow of circular debt has now reached Rs472bn as of November 30, 2017 after clearance of Rs480bn in 2013, soon after the PML-N came into power.