Power sector circular debt swells despite recovery drive

ISLAMABAD: The country’s power sector circular debt stock is said to have reached Rs 2.537 trillion during first quarter (July-September),2023-24, showing 10 per cent or Rs 75.7 billion growth in flow per month despite recovery through anti-theft drive.

According to sources, circular debt stock which touched Rs 2.310 trillion at the end of 2023-24, with a growth of Rs 57 billion in stock, is now hovering at around Rs 2.537 trillion with a growth of Rs 227 billion against growth of Rs 185 billion in same period of 2022-23.

Payables to power producers have reached Rs 1.671 trillion during first quarter of CFY from Rs 1.434 trillion at the end of FY 2022-23, showing addition of Rs 237 billion. The stock of payables to IPPs was Rs 1.536 trillion during July-September 2022-23.

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However, Genco’s payables to fuel suppliers have reduced to Rs 101 billion from Rs 111 billion as of FY 2022-23 at the same level as during first three months of FY 2022-23. No change was witnessed in Rs 765 billion parked in Power Holding Limited (PHL). PHL parked amount was Rs 800 billion during the same period of 2022-23.

The sources said, main reason of substantial growth in flow of circular debt, is issues of K-Electric (KE), AJ&K, release of subsidies, delay in implementation on QTA adjustments, higher interest payments, dollar rates, etc. IMF has also asked the authorities to notify regulator tariff adjustments.

The sources said, Rs 367 billion is receivable from KE as on September 2023 - pending due to subsidy dispute between the power utility company and the federal government.

According to sources, the amount of budgeted but unreleased subsidies has been recorded at Rs 22 billion during the first quarter of current fiscal year notwithstanding an amount of Rs 51 billion was released during July-September 2023 on this account.

The sources said, there is no unclaimed subsidies during first quarter of current fiscal year despite the fact that an amount of Rs. 70 billion was unclaimed in 2022-23 and Rs .10 billion during July-September 2022-23.

IPPs interest charges on delayed payments have reached Rs 68 billion in just three months of current fiscal year against Rs 29 billion in the same period of 2022-23.

The amount of IPPs interest charges on delayed payments was Rs 100 billion during the entire fiscal year 2022-23.

However, PHL mark-up paid out of IPPs’ claims were Rs. 34 billion during first quarter of current fiscal year against Rs 43 billion as of FY 2022-23 and Rs 11 billion during July-September 2022-23.

Pending generation cost (QTAs + FCAs) stood at Rs 60 billion against Rs 114 billion during the same period of 2022-23 and Rs 250 billion of FY 2022-23.

Non-payment by K-Electric reached Rs 49 billion in July-September 2023-24 against Rs 48 billion during the same period of FY 2022-23.

The sources said, Discos’ losses, inefficiency stood at Rs 86 billion during July-September 2023-24. as compared to Rs 63 billion in the same period of 2022-23, showing addition of Rs 23 billion in total circular debt stock.

The total amount of losses, inefficiency were Rs 160 billion during FY 2022-23.

Discos’ under recoveries reached Rs 222 billion during first quarter of 2023-24 as compared to Rs 181 billion during corresponding period of 2022-23; however, their cumulative under recoveries stood at Rs 236 billion as of June 30, 2023. Other adjustments (prior year recovery, etc.) were (Rs 244 billion) during July-September, 2023-24 against Rs 304 billion in July-September 2022-23.

Sharing details on payment through fiscal space, the sources said, in CY 2022-23 PHL principal repayment were Rs 35 billion whereas stock payments stood at Rs 127 billion totalling to negative Rs 162 billion.

The sources further stated that payables to power producers increased by Rs 5 billion due to withdrawals by FBR in April 2023.

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