Inefficient recovery system: power sector suffers Rs 85 billion loss in fiscal year 2012

Power sector faced a loss of Rs 85 billion during FY2011-12 on account of gap between billed amount and collections because of distribution companies' inefficient recovery system. Sources told Business Recorder that the total billing by distribution companies during last fiscal year was Rs 652.688 billion whereas their collection stood at Rs 566.856 billion, showing a gap of Rs 85 billion between billed amount and collection.
The problem of low recovery of distribution companies was discussed during the last meeting of the energy committee headed by Finance Minister Dr Abdul Hafeez Sheikh which has, so far, failed to make any progress in resolving the intractable circular debt.
The high ups of Water and Power Ministry have reportedly stated that Khyber-Pakhtunkhwa province had the lowest recovery rate leading to a shortfall of Rs 25 billion between billed and collection amount. The distribution companies in the province billed an amount of Rs 79.594 billion but their collection was Rs 54.042 billion, reflecting a shortfall of Rs 25.174 billion.
The officials maintained that distribution companies in Sindh province ranked second in recovery of billed amount and faced a shortfall of Rs 24 billion with total collections amounting to Rs 37.162 billion against billing of Rs 61.551 billion. Balochistan province ranked third with a gap of Rs 22 billion between billed and collection amount. The total recovery of distribution companies in the province stood at Rs 12.301 billion against the billing of Rs 34.027 billion during 2011-12.
The meeting was informed that recovery of power sector dues was relatively better in Punjab than other provinces with a deficit of Rs 14 billion. The total billing of distribution companies in Punjab was Rs 477.516 billion with collection of Rs 463.350 billion.
Sources said that line losses amounted to Rs 22 billion more than the allowed 16 percent by National Electric Power Regulatory Authority Company (Nepra). This in turn accounted for higher than budgeted subsidies to the power sector. The government budgeted Rs 107 billion on account of inter-disco tariff differential during 2011-12 but the year ended with an allocation of Rs 151 billion with a budget over run of Rs 44 billion.
The foregoing does not include the one-off consolidation of Rs 312 billion electricity arrears. The government has earmarked Rs 134 billion on account of tariff differential subsidies for the current fiscal year, which, analysts are agreed, would have to be raised during the year given what happened during the past three years.