According to a Business Recorder exclusive, the Finance Ministry has been unable to make any progress in settling the outstanding power sector dues against provinces, Azad Jammu and Kashmir, autonomous bodies and the private sector. Pepco's payables have increased to 422 billion rupees while its receivables have risen to 383 billion rupees. The private sector's dues have escalated to 171 billion rupees. Finance Budget Additional Secretary and Federal Adjuster Ikhlaq Ahmed proposed a three-pronged strategy to deal with this issue. First, to settle power dues where there is no dispute and in this instance Punjab, which is not disputing the dues claimed by Pepco, has begun the process of clearing them. Second, settle the power dues issue with reconciliation of data presented by both the parties for claims and it is reported that Balochistan and Khyber Pakhtunkhwa are in the process of resolving their issues. And finally, settle the power dues with an award in favour of any party, based upon facts tabled before the Federal Adjuster Office. Details reveal that around 110 billion rupees are due from Sindh - 55 billion rupees each due from the Sindh government and Karachi Electric Supply Company - which has challenged Pepco's claims as being highly exaggerated. The Federal Adjuster Office has been unable to mediate effectively between the two sides and the matter remains pending with serious negative consequences on the power sector's liquidity - the major reason for the ongoing energy crisis given its contribution to the inter-circular debt as opposed to generational capacity. There is no doubt that the claims need to be reconciled as soon as possible and in this context if the Federal Adjuster Office has failed to bring the two sides to an agreement then there is a need to go to a higher platform for this particular conflict resolution. There is therefore a need to invoke the Arbitration Act 1940 which first and foremost entails submission of an arbitration agreement which is essentially 'an agreement by the parties to submit to arbitration in the dispute which arises in respect of a defined legal relationship whether contractual or not'. In short, the two sides need to agree to go for arbitration in the national interest given that the power sector is suffering from an acute liquidity crisis. The next stage in the process is the selection of an arbitrator. In case the two sides do not agree to an arbitrator each party can then propose one name and the two resulting names would then select the third arbitrator who shall act as the presiding arbitrator. In case the two arbitrators do not agree on one single presiding arbitrator the appointment can be made upon the request of a party by the Chief Justice. The arbitral award is binding on the parties and the Act notes that "where the time for making an application to set aside the arbitral award shall be endorsed under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the Court". The private sector, as was reported, owes a whopping 171 billion rupees to Pepco. It is critical for the government to begin disconnection's until clearance of all dues and desist from allowing influential people to pay in small instalments lasting several years - the case of the spouse of the Foreign Minister Hina Rabbani Khar comes to mind. In the interest of fairness and with a focus on the need to eliminate circular debt as soon as possible, a debt that is having a major negative impact on the quality of life of the people of this country, an instalment must be proportionate to the income of the individual/production unit/firm.
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