Circular Debt increase by Rs 538bn in 2019-20: Power Ministry

The Ministry of Energy spokesperson has said that the circular debt increase by Rs 538 billion in 2019-20.

In a series of tweets, the Ministry of Energy stated that during the seven months from July 2019 to January 2020, the monthly growth of circular debt was brought down to Rs12bn - 14bn per month from Rs39bn in August 2018.

The spokesperson said that due to high inflation, and at the direction of the PM, quarterly tariff adjustment in January and April 2020 were deferred in addition to deferring Fuel Price Adjustment. In addition, due to Covid-19, monthly bills were deferred for three months starting March 2020.

The spokesperson informed that the combined impact of these relief measures lead to an unplanned increase in circular debt flow of approx Rs 320 billion. This addition resulted in final circular debt increase for 2019-20 was Rs. 538 billion.

The Ministry of Energy said that after healthy recovery of demand from Covid-19 starting late July, a 14 percent decrease in circular debt flow for first quarter i.e July to September 2020 has been achieved.

The spokesperson informed that the monthly flow from Jul-Nov 2020 is Rs. 31bn out of which Rs. 21bn per month relates mainly to quarterly adjusts. The spokesperson said that the cost increases was still not passed on to consumers to help full recovery for business and lessen the inflationary impact on average person.