ISLAMABAD: Finance Division has reportedly grilled Power Division for enhancing circular debt by Rs 90 billion in April 2023 despite the fact that a sufficient amount was available under the subsidy head, well-informed sources told Business Recorder.
Finance Division has cited reference to a letter of Ministry of Energy (Power Division) of May 25, 2023 titled “implementation of revised Circular Debt Management Plan (CDMP)” and stated that sufficient allocation of subsidy of Rs.210 billion was available till April 2023 under the Power Division’s demand; therefore, there is no justification for enhancement of Rs.90 billion in the circular debt in the month of April, 2023.
Currently, the circular debt is over Rs 2.5 trillion due to massive devaluation of Pak Rupee, less recovery by power Distribution Companies (Discos), failure in reduction of losses as per Nepra’s targets. Both IMF and World Bank are dissatisfied with the performance of country’s power sector.
Swelling circular debt also affects NPPs
Moreover, on proposed supplementary grant of Rs.58 billion, a meeting was held on May 31, 2023 in the Office of AFS (CF) duly attended by the Joint Secretary (PF), Power Division, Mehfooz Bhatti. After detailed deliberation, it was decided that Power Division may consider availing amount of Rs.56 billion against any head of subsidy where verified/ legitimate claims are available. This would help Power Division to maintain its CDMP commitments.
Beside, ECC’s decision of March 30, 2022, inter-alia, directed to hold reconciliation of Subsidy claims till June 2022, the sources said, adding that Power Division has been time and again requested to carry out reconciliation along with other subsidy claims.
According to sources, Finance Division has once again requested Power Division to advise the concerned officers to undertake exercise of reconciliation with this Division till June, 2022, as well as, FY 2022-23.
During the current fiscal year, the coalition government has paid an amount of about Rs 300 billion to reduce circular debt, which is still growing by Rs 500 billion per annum, i.e., Rs 41.66 billion per month.
According to budget documents, the government intends to increase subsidy for power sector to Rs 579.075 billion for FY 2023-24 from Rs 455 billion allocated for 2022-23, posting an increase of over 27 per cent.
For Inter-Discos tariff differential, an amount of Rs 225 billion has been earmarked in the budgeted amount of 2022-23 against allocations of Rs 184 billion for FY 2021-22, which is 21.6 per cent higher compared to outgoing fiscal year.
The government has budgeted Rs 25 billion for WAPAD/ PEPCO receivables – merged districts of KP (FATA subsidy£ against Rs 20 billion in budget 2022-23.
The budget documents further reveal that an amount of Rs 150 billion has been earmarked as Inter-Disco Tariff Differential in 2023-24 against Rs 225 billion in 2022-23, which is over 33 per cent less compared to outgoing year. The government has earmarked Rs 55 billion for AJ&K TDS in 2023-24 against budgeted Rs 3 billion in 2022-23 which was revised to Rs 75 billion. The government has also allocated Rs 25 billion on account of deficit for AJK against electricity revenue shortfall.
For K-Electric, the government has earmarked Rs 315 billion for FY 2023-24 which is 294 per cent higher against budget amount of Rs 80 billion and 66 per cent against revised amount of Rs 193 billion. Of Rs 315 billion Rs 171 billion have been earmarked for KE’s tariff differential against budget amount of Rs 60 billion. However, allocation for FY 2023-24 is one per cent lower - Rs 171 billion from revised amount of Rs 173 billion. An amount of Rs 7 billion has been budgeted for industrial support package during 2023-24 against Rs 13 billion allocated for FY 2022-23.
Copyright Business Recorder, 2023