Pakistan’s power sector circular debt swells to Rs2.31tr in FY23

Despite massive increase in tariffs, the circular debt stock of Pakistan’s power sector increased to Rs2.31 trillion by the end of June 2023, up from Rs2.25 trillion at the end of the previous fiscal year (FY22) — Rs57 billion, or nearly 3% higher after 12 months.

This is in stark contrast with figures of FY22, when the debt declined by Rs27 billion (from FY21 to FY22), clocking in at Rs2.25 trillion, data from the energy ministry’s Power Division showed on Tuesday.

According to a government document, total payables to the power producers stood at Rs1,351 billion, followed by Rs101 billion to generation companies’ (Gencos) payables to fuel suppliers, and Rs800 billion as the amount parked in Pakistan Holding Limi­ted (PHL) in fiscal year 2021-22.

However, fiscal year 2022-23 saw a massive surge in the payables to power producers, as it jumped to Rs1,434 billion.

Payables to Gencos increased to Rs111 billion, but the debt to PHL decreased to Rs765 billion in FY23.

In FY22, the budgeted but unreleased subsidies were reduced by Rs12 billion, however, that amount stood at nil in FY23.

The unclaimed subsidies were reduced by Rs133 billion in the fiscal year 2022 but were decreased by Rs70 billion in FY23. “This includes release of Rs21 billion in respect of previous year zero rated outstanding claims,” said the Power Division.

Meanwhile, the independent power producers’ (IPPs) interest charges on delayed payment increased to Rs105 billion in 2021-22 but dropped to Rs100 billion by the end of FY23.

The markup paid on the IPPs’ claims by the PHL, which surged to Rs29 billion in 2021-22, further jumped to Rs43 billion in FY23.

The pending generation cost, which is made up of quarterly tariff adjustments (QTA) and fuel charge adjustments (FCA), declined from Rs414 billion in FY22 to Rs250 billion in FY23.

The dues pending on the part of K-Electric fell from Rs107 billion to an excess payment of Rs53 billion in FY23.

However, the power distribution companies’ (Discos) losses due to inefficiency rose from Rs133 billion to Rs160 billion in FY23.