Secretary PD briefs PAC body: circular debt to be brought down to Rs 100 billion by June 2020

The government has started implementing a viable plan to effectively deal with circular debt which will be brought down to Rs 100 billion by June 2020 and various steps are being taken in this regard. Secretary Power Division, Ministry of Energy, Irfan Ali stated this while briefing a subcommittee of the Public Accounts Committee (PAC) which met here on Tuesday under the chairmanship of Noor Alam Khan to review and discuss audit paras related to Power Division and attached departments of year 2017-18.
The committee directed the government to budget all the subsidies being paid to various consumers on different accounts in a bid to effectively deal with the ever-increasing circular debt like situation. Irfan Ali further informed the panel that in recently held talks with International Monetary Fund (IMF) the government has agreed to budget all the subsidies being provided to various segments of economy, and the step is aimed at bringing transparency and clarity in the financial matters.
The panel was informed that Rs 159.6 billion are outstanding against various consumers on account of non-removal of electrical equipment and non-recovery of arrears for many years. The secretary Power Division in response to a question asked by member committee Naveed Qamar said that this outstanding amount is against the defaulters who had not paid their bills for years but still are getting electricity.
The panel also directed the ministry to appoint permanent heads of Central Power Purchasing Agency (CPPA), National Transmission, Dispatch Company (NTDC) and other attached departments instead of giving additional charges to ministry officials, saying such practices are affecting the performance of organisations.
The secretary Power Division said that at present circular debt stands at Rs 603 billion, saying it was over Rs 800 billion but recently the ministry has borrowed Rs 200 billion from Islamic banks.
"We have adopted a viable policy to deal with the circular debt, which included recovery of power bills outstanding against provinces and public sector organisations. We have decided to pay water tariff to Khyber Pakhtunkhwa (KPK) and Azad Jammu and Kashmir (AJ&K) instead of supplying subsidised power to KPK and AJ&K. This will help reduce circular debt significantly.
"Moreover, a vigorous drive against power theft as well as line and transmission losses is underway and as a result this year we have managed to recover Rs 40 billion additional amount from power consumers," the secretary maintained. Out of total amount, Rs 16 billion have been collected on account of tariff increase while Rs 24 billion have been collected due to improve system performance.
The Power Division's Rs 180 billion are stuck with Federal Board of Revenue (FBR) on account of refunds and the ministry is pursuing for the recovery of the amount, and once the amount is recovered it will also reduce the burden of circular debt, Irfan Ali said.
The Power Division officials said that one of the major reasons behind piling up of the circular debt was delayed determination of the tariff by National Electric Power Regulatory Authority (NEPRA) over the years. He said that instead of increasing power tariff in one go at the end of the year the government has decided to pass on the power tariff on end consumers on quarterly basis, adding that this will also help reduce circular debt.
He said that the government has decided to pay water charges to the government of AJ&K instead of giving subsidies on power. He added the government will reduce subsidies to AJ&K from Rs 18 billion to Rs 2 billion per annum. The power consumers of AJ&K will pay the bills at par with rest of the country.
"A list of employees involved in corruption should be sent to committee and the same will be dispatched to National Accountability Bureau (NAB) and Federal Investigation Agency (FIA) for action," Noor Alam Khan while expressing his displeasure over the performance of the Power Division said.
"If Ministry of Power puts its house in order and eliminates corruption and power theft, there will be significant improvement in all the distribution companies," he opined. Alam said he also knows that employees of Discos are involved in demanding thousands of rupees from consumers as bribe for installing electricity equipment.
"I have documents with me that employees are demanding money for installation of meters," he apprised the official of the Ministry of Power and suggested strict action against them. Noor Alam Khan said that in his area a poor man living in a mud house received Rs 1 million electricity bill for a month. He asked the ministry to address the massive over-billing issue of the people, otherwise power theft and transmission and line losses will continue.
The secretary, while briefing the committee, said about 2,000 FIRs have been registered against the employees involved in corruption. He said many employees of the power distribution companies have been terminated from service while others were issued show cause notices for their involvement in illegal matters.
Naveed Qamar observed that load-shedding in feeders having loss and theft is unfair to those consumers of the feeder which are paying the bills regularly. While discussing the shortage of staff in various Power Distribution Companies (Discos), the panel was informed that at present all the Discos are facing serious human resources shortage.
The government included all the Discos in privatisation list with directions to the companies not to hire new staff, but now the government has allowed the power distribution companies to hire critical staff only. Chief Operating Officer Peshawar Electric Supply Company, Amjad Khan briefing the panel said that total sanctioned posts in his company are 27,000 but at present available staff is 14,000, thus the company is facing a shortage of 13,000 employees.
The committee also directed the ministry to fill the vacant positions in the Discos on merit. The secretary informed the committee that process of hiring will be completed in August on important posts. The committee also differed on the audit paras of non-recovery of cost of sale of energy from Discos amounting to Rs 291 billion, non-recovery of receivables from energy defaulters, Rs 160.35 billion, and loss of revenue due to line losses beyond NEPRA's target, Rs 25.99 billion.