Ministry of Water and Power has reportedly urged the Ministry of Finance to clear power subsidy claims of Rs 102 billion immediately aimed at paying the Independent Power Producers (IPPs) and Pakistan State Oil (PSO), a senior official told Business Recorder.
Water and Power Ministry, the official said, has periodically raised the issue of subsidy claims during several meetings of Cabinet Committee on Energy (CCoE) and with the Finance Ministry responsible for reconciling the claims of power Distribution Companies (Discos) being submitted through the administrative Ministry. He said the top brass of the country has been sensitised that all the IPPs are operating normally at this time but if releases are not made in accordance with the agreed schedule, IPP's operations can be impacted.
Join Secretary (Power Finance) Zargham Eshaq Khan spends most of his time with the Director General Economic Reforms Unit (ERU) Khaqan Najeeb and discusses different fiscal issues of power sector with him. In reply to a question, he said, presently total stock of circular debt stood at Rs 320 billion in addition to Rs 360 billion parked in the PHPL.
According to the official, power sector is current in payment with PSO but the latter is including Later Payment Surcharge (LPS) amounting to Rs 56 billion. Ministry of Water and Power had sought a Rs 208 billion subsidy for power sector in financial year 2016-17 against Rs 144 billion earmarked in 2015-16 but the government had extended only Rs 116 billion for subsidy; of which Rs 95.4 billion for Discos and Rs 22.6 billion for KE.
Ministry of Water and Power maintains that a 44 per cent increase has been projected in subsidy in 2016-17 due to new generation injected into the system as sale of electricity is expected to increase by 20-25 per cent.
PSO, on the other hand, argues that its receivables have increased by Rs 34 billion just in one year due to far less payments by the public sector entities. Ministry of Water and Power has knocked on the door of the Prime Minister for timely releases of subsidy claims being submitted by the Discos.
Recently, Secretary Water and Power requested Secretary to the Prime Minister through a letter to issue the following instructions to the Finance Division: (i) clear all subsidy dues in the next 15 days after making budgetary provision through supplementary grant; and (ii) rationalise future subsidy budgeting after taking into consideration the policy decisions by the government for various categories of consumers which may either be reduced as per budgetary provisions or the budgetary provisions increased to match the announced subsidies.