Distribution companies: recoveries push up circular debt to over Rs 750 billion

The Ministry of Power Division said on Monday that power recoveries of distribution companies have increased the circular debt to over Rs 750 billion and consequently DISCOs have been unable to invest in power infrastructure. The acknowledgement came from the Ministry of Power Division first time in the backdrop of the discussion that lack of investment in transmission lines has been causing frequent tripping and loadshedding, especially in remote areas.
The ministry admitted during a meeting of the Planning and Development Sub-Committee of the National Assembly, presided over by Sher Akbar Khan, that governance issues in the power sector have pushed up circular debt to an unsustainable level.
Deputy Secretary Project Development Qaiser Ahmed said, "The financial health of some distribution companies is poor due to circular debt problem. Circular debt has been on the rise due to less recoveries in the power sector," he said and particularly mentioned Peshawar Distribution Companies (PESCO) and Hyderabad Distribution Companies Limited (HESCO) in this regard.
Later, talking to Business Recorder, another official said recoveries of billed amount have been very poor in QESCO, SEPCO, PESCO, and HESCO. The chairman of the committee said the system has been heavily overloaded due to lack of investment and is unable to transmit electricity in areas under the jurisdiction of PESCO. This has become a routine practice that consumers have been getting fault in transformer repaired on self-finance basis. "When there is a fault in a transformer, consumers of area contribute for its maintenance or replacement," said chairman of the committee. Members of the committee suggested to the ministry to seek financing from the donors to establish grid stations in areas the committee was tasked to look into the meeting.
The first meeting of the sub-committee was met with agenda items; (i) to look into the distribution and system augmentation program in district Buner under PSDP; (ii) establishment of 132 kV grid station in Chitral, Chitral hydel power capacity enhancement status of PESCO, Pakhtunkhwa Development Organization (PEDO) and Water and Power Development Authority (WAPDA) agreement & steps taken for provision of Electricity to Upper Chitral, Drosh and Chitral Town by 25th December, 2017 (PSDP).
The meeting was told that PC-1 for establishment of 132KV grid station at Buner had been approved in PESCO's 7th secondary transmission grid (STG) program and site was selected by the site selection committee. The demand for cost of land received from Deputy Commissioner Buner to Land Acquisition Collector PESCO Peshawar and demand for release of fund is in process.
The construction of double circuit 132kV transmission line for Barikot-Daggar has also been approved and tender for construction of towers foundation, erection of towers and stringing of conductor has been opened and is under process of approval. However, the officials of ministry cited financing as major obstacle to undertake these projects, as Power Division said around Rs 8 billion are estimated to strengthen the transmission network in the areas under discussion. The members of the committee suggested to the ministry that donors may be approached to seek financing for these projects.