Circular debt to reach Rs2.8tr in next four months, NA panel told

Circular debt was recorded at Rs2.3tr in December 2020, as compared to Rs1.1tr in June 2018

ISLAMABAD: The National Assembly’s Standing Committee on Finance and Revenue was informed on Tuesday that the country’s circular debt would surge to Rs2,805 billion in the next four months of the current fiscal year.

The additional secretary of the Power Division, while briefing the meeting about the sector-wise circular debt, stated that the debt was recorded at Rs2,303 billion till December 2020, as compared to Rs1,126 billion in June 2018.

“We are expecting Rs117 billion line losses due to the bad performance of DISCOs, while the government will also have to give another Rs190 billion subsidy to electricity consumers,” the additional secretary said. “Line losses were recorded at 18.3pc in June 2018 as compared to 17.8pc in December 2020.”

He said that NEPRA had recently approved a Rs3.34 increase in electricity price, but the price of electricity was only increased by Rs1.95. Tariff for consumers of up to 300 units was Rs10.20, whereas the same for commercial consumers was Rs20.70 per unit, he added.

Article continues after this advertisement

He further informed the committee that a circular debt management plan would soon be submitted to the cabinet, adding that strategies were being devised to reduce technical losses and improve recovery.

The additional secretary stated that electricity tariff for lifeline consumers has also been enhanced to 100pc, and that the government would determine the electricity tariff on the basis of production cost.

The committee expressed grave concerns with regard to increasing circular debt and directed the Power Division to present a comprehensive draft in this regard before the NA panel.

The committee members were of the view that an increase in circular debt would create huge problems for the economy, especially industries. The committee lamented Rs55 billion monthly increase in circular debt, declaring it an alarming situation for the country.

- Advertisement -
Avatar
Shahzad Paracha
The writer is a member of Pakistan Today's Islamabad bureau. He can be reached at [email protected]

5 COMMENTS

  1. And govt/private sector are still adding more power plants. Hope the govt puts a moratorium on all new thermal power/run of the river hydropower projects.

  2. PTI govt has tripled the circular debt since coming into power. This is a clear sign of incompetency as a major issue which was identified prior to coming to power has still not been addresses. What is stopping the govt form reducing subsidies or reducing massive theft through DISCOS in the name of line losses.

  3. I hope the circular debt issue gets resolved. All the losses in most cases get passed to the consumer who is the end user.

  4. Coupled this issue with excess capacity which is going to come online in the next few years and we are looking at a scenario where there is no money left in the budget for basic developmental projects in education, health, etc but only funds to serve domestic and international debt.

    • Or in other words, Pakistan will turn bankrupt in 3-4 years thanks to Mian Mafrur & Dalla Dollar Ishaq Dar.
      And another circular debt is also rising –> GAS.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -

Must Read

Reformation of pay and pension system on the cards

ISLAMABAD: Federal Minister for Finance and Revenue, Shaukat Tarin has directed Pay and Pension Commission Chairperson Nargis Sethi to chalk out short, medium, and...