Power Division has reported receivables totaling over Rs225 billion from K-Electric (KE), including a Rs186.5 billion markup on a principal liability of Rs38.8 billion.
This was disclosed in the Power Division’s latest circular debt report, which highlighted key trends in the power sector as of November 2024.
The Power Division revealed that KE’s non-payments totaled Rs11 billion as of November 2024, a significant improvement from Rs59 billion reported in November 2023. The total government claims against KE, however, amount to Rs225 billion, largely driven by a markup of Rs186.5 billion on a principal liability of Rs38.8 billion.
KE, in contrast, has been claiming higher receivables from government entities, including provincial departments, with both parties engaged in arbitration to resolve these disputes.
According to the report, the circular debt stood at Rs2.381 trillion at the end of November 2024, marking a reduction of 11% from Rs2.678 trillion in November 2023.
The report, released after a hiatus of more than six months, detailed declines in all three major components of circular debt: payables to power producers, payables to fuel suppliers, and liabilities parked in Power Holding (Pvt) Ltd (PHPL).
The report attributed the Rs297 billion decline in circular debt over the past year to increased recoveries through quarterly tariff adjustments (QTAs), fuel price adjustments (FPAs), and prior year adjustments.
Over-collection of pending generation costs contributed Rs31 billion during the first five months of FY2024-25, compared to a Rs146 billion increase during the same period last year.
Additionally, Rs234 billion was recovered under prior year adjustments by November 2024, compared to Rs133 billion a year earlier.
The report noted an 11.7% decline in payables to power producers, which dropped to Rs1.608 trillion in November 2024 from Rs1.822 trillion in November 2023. Liabilities parked in PHPL also fell by 10.7%, decreasing to Rs683 billion from Rs765 billion. Payables by generation companies to fuel suppliers saw a slight reduction, falling to Rs90 billion from Rs91 billion during the same period last year.
Unpaid subsidies were reduced to Rs5 billion in the July-November 2024 period, compared to Rs10 billion in the same period last year. However, the government paid Rs70 billion in markup to banks this year, up from Rs63 billion last year, due to higher interest rates.
The report highlighted that the cost of inefficiencies from distribution companies (DISCOs) increased by 34% to Rs94 billion in the first five months of FY2024-25, compared to Rs70 billion in the same period last year. Despite this, under-recoveries dropped by 50%, falling to Rs76 billion from Rs153 billion.
The total cost of losses in the five-month period was reported at Rs276 billion, while under-recoveries stood at Rs315 billion. The report emphasized that inefficiencies in loss management continue to pose a significant challenge to the power sector’s financial stability.
