The caretaker government has so far failed to provide relief to the general public with regard to power load shedding that is currently ranging from 8 to 18 hours in different parts of the country. According to official statistics, on April 5, 2013 power generation stood at 8,785 MW against demand of 12,485 MW, showing a shortfall of 3,700 MW of which hydel's share stood at 2,240 MW, Independent Power Producers (IPPs) share 4,860 MW and 1,685 MW is being generated from Gencos.
National Transmission and Dispatch Company (NTDC) is also supplying 630 MW power to Karachi Electricity Supply Company (KESC). However, insiders claim that generation gap is much higher than being officially claimed with supply between 7,000-8,000 MW whereas demand is 13,000 MW.
"We have insufficient fuel and gas which is the main reason behind the current power crisis. Hydel generation is also at half its total capacity which is the seasonal average," said an official on condition of anonymity. Finance Ministry has released subsidies amounting to Rs 267 billion to the power sector during the first nine months of the current financial year which is higher than the 185,287 million rupees budgeted for the entire year.
Ministry of Water and Power has sought Rs 38 billion more as the sector continues to suffer from a liquidity crisis due to the rising inter-circular debt; and Finance Ministry has been requested to release Rs 10 billion immediately as part of the Tariff Differential Subsidy (TDS).
The sources revealed that the Ministry of Petroleum and Natural Resources has also sought Rs 109 billion from the federal government to ensure adequate supply of furnace oil to power plants for three months - March, April and May this year. Finance Ministry has no fiscal space to provide the Rs 57 billion requested by PSO though reports indicate that Rs 52 billion may be arranged by Pepco via Fuel Price Adjustment (FPA). PSO is seeking Rs 26 billion for March, Rs 36 billion for April and Rs 47 billion for May.
The sources said the situation is critical and the Ministry of Water and Power in its summary has suggested a number of actions including supply of 25,000 tons of furnace oil daily to maximise thermal generation. The Water and Power Ministry has further requested the Finance Ministry to arrange payments of additional subsidy to power sector. Measures are being taken to recover old receivables from consumers (Rs 100 billion), government departments Rs 142 billion, fuel price adjustment Rs 79 billion and NAB has been requested to recover Rs 100 billion.
Interim Prime Minister has been requested to intervene to ensure recovery of stuck up revenue with FBR (about Rs 90 billion). The sources said Finance Ministry has been apprised of the issues of the circular debt, saying that one of the major factors responsible for piling up of the circular debt is the amount blocked with FBR (Rs 72.1 billion against which claims filed amount to Rs 35.2 billion) either as refund or excess of input tax over output tax. Not only is a large amount blocked with FBR but the Distribution companies (Discos) and generation companies (Gencos) are also facing litigation with FBR (Rs 79 billion) and sustaining legal charges.
Petroleum Ministry argues that over a period of five years PSO supplied fuel to power sector as per demand to minimise the gap between demand and supply. There was a time when power sector receivables ballooned to around Rs 200 billion but this was reduced by issuing Term Finance Certificates (TFCs) amounting to Rs 70 billion in September 2012 and currently the total receivables of PSO from power sector are Rs 115 billion.
Due to these high receivables PSO has exhausted its lines of letter of credit and overdraft available with the banks. Due to non payment of LCs on time to international suppliers it has paid substantial penalties on default on international LCs but some of the banks have refused to work with PSO. This has further compounded the problem of arranging products locally as well internationally.
If more furnace oil imports are required by the Ministry of Water and Power the Ministry of Petroleum and PSO must be provided with the requisite funds otherwise they will not be in a position to meet any additional demand, going forward from June 2013 onwards, the sources quoted Secretary Petroleum as conveying in a letter to Secretary Water and Power.