The government is compelled to immediately allocate Rs 80 billion to Water and Power Development Authority (Wapda) and Independent Power Producers (IPPs) to clear dues of fuel suppliers and ensure a smooth supply to continue operations.
Sources revealed to the Business Recorder that circular debt between fuel suppliers and power producers may worsen the energy crisis and create fuel supply problems. President Asif Ali Zardari has called an emergency meeting on energy crisis today (Friday) to review the situation. The heads of gas companies, fuel supplier companies and petroleum ministry officials will attend the meeting.
Sources said that due to rising circular debt oil refineries have reduced their production while oil refinery Bosicor ceased its production, Pak Arab Refinery (Parco) is operating at only 40 percent of its capacity.
Sources said that gas companies are also facing problems due to non-payment of Rs 15 billion dues by Pakistan Electric Power Company (Pepco). Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) have requested intervention from the Petroleum Ministry several times to clear their dues. Pepco is to pay Rs 11 billion to oil suppliers and Rs 110 billion to Independent Power Producers (IPPs).
Pakistan State Oil (PSO) is the major fuel supplier in the country with a market share of 70 percent. The circular debt between PSO and oil refineries is becoming the main reason for fuel shortage in the country. PSO has to recover billions of rupees from its clients and, in turn, has to pay billions of rupees to oil refineries.
PSO is to recover Rs 38 billion from Hub Power Company (Hubco), Rs 18 billion from Kot Adu Power Company (Kapco) and Rs 6 billion from Pepco. PSO is to pay Rs 37 billion to Parco, Rs 1 billion Bosicor, Rs 9 billion PRL, Rs 8 billion NRL and Rs 11 billion to Attock Refinery. PSO is facing problems to pay dues to the oil refineries due to non payment of dues from power producers. The meeting will review the situation of circular debt and suggest measures to resolve the issue.
Sources revealed that government would have to immediately allocate around Rs 80 billion to Wapda and IPPs to clear the dues of the PSO. If the government fails to take immediate measures to resolve the issue of circular debt, the power and fuel shortage crisis would worsen.
During the meeting different measures would be proposed to the President to end the energy crisis in the country. At present the country has no energy security plan incorporating measures to tackle the energy emergency. During the meeting it is expected that a proposal will be put on the table to develop an energy security plant.
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