Incoming PTI government set to inherit Rs1.1 trillion of circular debt

The committee was told PHPL is entitled to pay Rs153 billion in annual interest on the loans obtained

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ISLAMABAD: The incoming Pakistan Tehreek-e-Insaaf government will inherit Rs1.1 trillion of circular debt passed on from the previous government, amidst tall claims that it had brought improvement in power production.

The previous PML-N government in 2013 came into power with the promise of ending power outages during its five-year tenure, however, the circular debt rose to behemoth levels crossing the Rs1 trillion mark after the conclusion of its tenure, reports Express Tribune.

A Senate special committee on circular debt meeting held on Friday, Ministry of Energy (MoE) officials informed from the overall circular debt, Power Holding Private Limited (PHPL) had obtained Rs582.86 loans, whilst Rs566 billion was borrowed to cover receivables of power distribution companies (Discos).

Senator Shibli Faraz presided over the meeting and the committee was told PHPL is entitled to pay Rs153 billion in annual interest on the loans obtained.

The Power Division had requested National Power Regulatory Authority (Nepra) to add the above-mentioned amount in consumer tariff, which was requested by the power sector regulator.

The power sector regulator contended loans didn’t constitute part of development budget and were obtained for smoothly operating the Discos.

Also, the committee was informed the power sector receivables from private and government clients stood at a staggering Rs817.5 billion.

However, the committee was told that consumers were paying Rs159 billion in shape of taxes in their electricity bills.

And it was disclosed Central Power Purchasing Agency (CPPA) was getting Rs66 billion out of Rs100 billion levied in electricity bills.

During the meeting, Senator Musadik Malik and committee chairman traded barbs. Mr Faraz held the previous government for the mess in the power sector, to which Mr Malik said he would walk out if his opinion wasn’t heard.

Senator Musadik Malik contended it wasn’t possible to stop theft till smart meters were installed.

He added the loan offered by the Asian Development Bank (ADB) for smart meters installation had some pitfalls.

Mr Malik said the government would need to efficiency and improvement in Discos where losses and theft were high.

However, the committee observed the circular debt would further rise after the addition of new power plants to the national grid.

To this, the Power Division officials said the government would be required to enforce loadshedding in areas where theft and losses were high.