Jul-Dec power sector circular debt soars to Rs2.55trn

ISLAMABAD: The country’s power sector circular debt stock is said to have reached Rs 2.551 trillion during first six months (July-December) 2023-24, showing 10.5 per cent growth in flow per month – Rs 40 billion in total terms – sources close to caretaker Minister for Power and Petroleum told Business Recorder.

According to sources, circular debt stock which touched Rs 2.310 trillion at the end of 2023-24, with a growth of Rs 57 billion in stock, is now hovering at around Rs 2.551 trillion with a growth of Rs 241 billion against growth of Rs 283 billion in the same period of 2022-23.

Payables to power producers have reached Rs 1.673 trillion during first six months of CFY from Rs 1.434 trillion at the end of FY 2022-23, showing addition of Rs 239 billion. The stock of payables to IPPs was Rs1.673 trillion during the corresponding of FY 2022-23.

Energy sector: Major step taken towards reducing circular debt

Genco’s payables to fuel suppliers have increased by Rs 14 billion to Rs 112 billion during CFY 2023-24 as compared to Rs 98 billion during the corresponding period of 2022-23. No change was witnessed in Rs 765 billion parked in Power Holding Limited (PHL).

The sources said the main reason for the substantial growth in flow of circular debt is issues of K-Electric (KE), AJ&K, release of subsidies, delay in implementation on QTA adjustments, higher interest payments, dollar rates, etc. IMF has asked the authorities to notify regulator tariff adjustments.

The sources said, Rs 336.4 billion is receivable from KE as on December 2023 as recently ECC approved Rs 50 billion on account of KE’s QTA which were used by CPPA-G to clear its liabilities.

According to sources, the amount of budgeted but unreleased subsidies was Rs 10 billion during the first six months of current fiscal year against Rs 82 billion in the same period of 2022-23. There were no unclaimed subsidies during first half of current fiscal year despite the fact that an amount of Rs. 70 billion was unclaimed in 2022-23 and Rs 17 billion during July-December 2022-23.

IPPs interest charges (PHL +IPPs) were Rs58 billion in six months of current fiscal year against Rs 85 billion in the same period of 2022-23.The amount of IPPs interest charges was Rs 143 billion during the entire fiscal year 2022-23.

Pending generation cost (QTAs + FCAs) stood at Rs 187 billion against Rs 118 billion during the same period of 2022-23 and Rs 250 billion of FY 2022-23.

Non-payment by K-Electric was Rs 9 billion in July-December 2023-24 against Rs 91 billion during the same period of FY 2022-23.

The sources said, Discos’ losses, inefficiency stood at Rs 77 billion during July-December 2023-24 as compared to Rs 62 billion in the same period of 2022-23, showing addition of Rs 15 billion in total circular debt stock. The total amount of losses, inefficiency were Rs 160 billion during FY 2022-23.

Discos’ under recoveries reached Rs 149 billion during first half of 2023-24 as compared to Rs 62 billion during corresponding period of 2022-23; however, their cumulative under recoveries stood at Rs 236 billion as of June 30, 2023. Other adjustments (prior year recovery, etc.) were Rs74 billion during July-December 2023-24 against Rs246 billion in July-December 2022-23.

The cumulative financial impact of interest charges (PHL+IPPs), pending generation cost (QTA+FCA), non-payment by K-Electric, Discos losses/ inefficiency, Discos under recoveries stood at Rs 378 billion during the first half of current fiscal year as compared to Rs 318 billion during the same period of 2022-23 and Rs 220 billion of entire fiscal year 2022-23.

The sources further stated that payables to power producers increased by Rs 5 billion due to withdrawals by FBR in April 2023.

Copyright Business Recorder, 2024