The government is unlikely to resolve the chronic problem of Rs 664 billion circular debt by compelling commercial banks to a debt swap of Rs160 billion, it was learnt. Sources told Business Recorder that the major reason for the circular debt was massive line losses of distribution companies as well as difference between the notified and implemented tariff.
Non resolution of these issues in the past has been responsible for the failure of the government to eliminate or even reduce it in the medium to long term. This is unlikely to change, analysts point out, with debt swap of Rs 160 billion.
Critics blame the sluggish performance of the inter-ministerial Committee headed by Dr Hafeez Sheikh, Advisor to Prime Minister on Finance, with members Special Assistant to Prime Minister on Petroleum, Dr Asim Hussain and Minister for Water and Power Syed Naveed Qamar for the failure to implement measures approved by the Cabinet meeting with respect to the circular debt. The gap between billed and recovery is continuously widening, reflecting an increase in power theft.
Sources said that Pepco payables increased from Rs 220 billion on July 1, 2011 to Rs 367 billion in the first week of November 2011 whereas receivables stood at Rs 296 billion. Pepco's receivables of Rs 296.55 billion included Rs 13.8 billion from federal government for various accounts.
Pepco's receivable from the provincial governments increased to Rs 43 billion which included Rs 30.55 billion on account of various departments and agencies, and Rs 12.95 billion on account of 12.5 percent power subsidy provincial governments are providing to agriculture tube wells in their respective provinces.
According to documents, the AJK government is required to pay Rs 11 billion to Pepco, KESC Rs 45 billion and Pepco's outstanding against the private sector reached Rs 149.47 billion. Moreover, Rs 18.60 billion receivable cases are pending in various courts.
Pepco's payables in the energy sector reached Rs 367.997 billion and the company has to pay Rs 13.731 billion to gas companies, Rs 12.557 billion to oil companies and Rs 259.140 billion to IPPs. Pepco also owes Rs 62.993 billion to Wapda for hydel power and Rs 19.556 billion for rental power, etc.
Official documents reveal that Pepco's receivables increased by 66 per cent during the last four months with payables going up from Rs 220 billion on June 30, 2011 to Rs 367 billion in November 2011. The payables to gas companies went up from Rs 11 billion in July 2011 to Rs 13 billion in November 2011, oil companies from Rs 681 million to Rs 12 billion and to IPPs from Rs 139 billion to Rs 259 billion.
The payables to Wapda for hydel power were Rs 56 billion on July 1, 2011 and increased to Rs 62 billion in November 2011 and to rental power, NTDC and Gencos from Rs 12 billion to Rs 19 billion for the period under review. Analysts say the government has failed to fix the problem of circular debt in power sector and is resorting to the unfair approach of making consumers pay for corruption, inefficiencies of distribution companies. This, analysts maintain, is patently evident given the fact that the energy committee had also proposed that Nepra should be asked to allow distribution companies to increase the adjustment of line losses in the power tariff from existing 16 percent to 19 percent and for some companies even over 35%.