Power sector’s circular debt likely to swell to Rs2,587bn till June

ISLAMABAD: The power sector’s circular debt has been increasing is likely to increase to Rs2,587 billion till June.

Sharing the projected figures, sources told Profit that circular debt would increase to Rs2,587 bn by June this year as payable to Independent Power Producers (IPPs) would increase to Rs1,510 bn, while payable by power generation companies (GENCOs) to fuel suppliers is estimated to be around Rs100 bn, and the amount parked in Power Holding Private Limited (PHPL) would increase to Rs77 bn. “The power sector’s circular debt has been increasing with each passing day, which is contrary to the claim of the incumbent government.”

As per details, total circular debt was Rs1,612 bn in 2018, Rs2,150 bn in 2019, while it was Rs2,303 bn in 2020.

Sources said that poor governance — low recovery of monthly bills and high power theft — gave birth to the complicated ‘circular debt’, forcing the government to compromise on working capital at power production, transmission, distribution as well as oil and gas supplying firms.

Earlier, the Cabinet Committee on Energy (CCoE) had directed the Power Division to present figures of billing, collections and circular debt of power sector.

The Power Division has submitted verified figures of circular debt and projected figures of circular debt of the power sector on the new format before CCoE.

It is pertinent to mention that the government had been claiming that it had brought down the monthly build-up in circular debt from Rs38 bn during the tenure of the Pakistan Muslim League-Nawaz (PML-N) to Rs12 bn and aimed to further reduce it to Rs8 bn per month by December last year.

However, all claims made so far by the government have proved wrong as the circular debt continues going up with each passing day.

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Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected]
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