ISLAMABAD: The government on Friday was informed the circular debt in the power sector including the loans and liabilities had touched a record high of Rs1.155 trillion.
A federal cabinet meeting was held on Friday, presided over by Prime Minister Imran Khan was told Rs580 billion were parked in Power Holding Private Limited (PHPL) including Rs575 billion in outstanding payments, reports The News.
Also, the amount owed to Pakistan State Oil (PSO) has risen to Rs331.5 billion and this poses a risk to the smooth operation of the country’s power sector.
And power division officials informed the cabinet that the previous PML-N’s government claim to have ended power outages was wrong, a senior official part of the presentation revealed.
The cabinet was told due to a shortfall of 4,000 megawatt because of constraints in the national electricity distribution system was resulting in power outages across Sindh, Khyber Pakhtunkhwa and Balochistan.
PM Khan directed the power division to prepare workable recommendations for uninterrupted electricity supply to the industrial sector and supply of electricity at affordable rates.
Moreover, a power division official said a Rs160 billion surge in circular debt had been recorded due to a federal cabinet decision in December last year to permit electricity supply to all feeders, notwithstanding whether they served loss or profit-making areas.
In the presentation given to the cabinet, power division officials said the amount of electricity billed to consumers comprised 90 percent of total supplies and resulted in losses of Rs120 billion per annum.
Line losses were recorded at 18.3 percent against an allowed limit of 16.3 percent, with the additional cost of Rs196 billion per annum passed unfairly onto consumers.
The remainder of the line losses i.e. 2 percent amounting to Rs24 billion per annum were added to the circular debt.
Policy guidelines were requested by the power division from the cabinet for devising a long-term strategy to decrease losses, including giving provincial governments power to act against influential elements indulging in electricity theft worth Rs85-90 billion per annum.
The debt office of the ministry has been given the job of negotiating Rs50 billion in loans from Islamic and commercial banks to help decrease the circular debt bill.
Interestingly, commercial banks previously declined to provide the Rs50 billion loan due to the previous government’s inclination to service its debt but not pay off the owed principal amount.
