The power sector’s receivables have soared by over 27 percent during the last 17 months to Rs 827.377 billion in November 2019 from Rs 647.030 billion in June 2018.
These figures were shared by the Power Division with Senate Standing Committee on Power headed by Senator Fida Muhammad which met on Friday to discuss different issues related to the poorly performing power sector.
According to the statistics, the stock of government receivables has also posted a growth of over 36 percent to Rs 200.864 billion from 146.837 billion. These receivables belong to the federal government, AJ&K government and provincial governments. The amount of receivables against federal government stood at Rs 7.196 billion in June 2018 and rose to Rs 15.667 billion during the past 17 months, while growth in receivables against AJ&K jumped to Rs 123.838 billion from Rs 99.266 billion. Receivables stock against provincial governments reached Rs 61.358 billion from Rs 40.376 billion.
The official documents further reveal that receivables against running defaulters and disconnected defaulters also increased by 25 percent from Rs 500.192 billion in June 2018 to Rs 626.513 billion in November 2019.
The issue of quarterly adjustment comprising 11 quarters (33 months) of Karachi Electric (KE) also came under discussion. Senator Nauman Wazir Khattak stated that KE was already selling electricity to its consumers at a lower rate than other Distribution Companies (Discos). The committee was informed that last week National Electric Power Regulatory Authority (Nepra) increased KE’s tariff by 38 percent or Rs 4.87 per unit to Rs 17.69 from Rs 12.82 per unit across the board for 11 quarters July – Sep 2016 to Jan – March 2019 under quarterly adjustment formula.
Additional Secretary Power Division, Waseem Mukhtar informed the committee that the Nepra’s quarterly tariff adjustment has been received in the Power Division which will be notified next week. The financial impact of quarterly adjustment has been calculated at Rs 106 billion.
He further stated that the financial health of KE electricity was badly affected due to delay in determination of quarterly adjustments.
Chairman Standing Committee observed that with this massive burden on consumers, there is bound to be hue and cry.
A representative of Nepra informed the committee that it was the discretion of the federal government to determine the amount of subsidy, if any, to be given to KE.
Senator Nauman Wazir Khattak noted the government’s withdrawal of Industrial Support Package (ISP) according to which Rs 3 per unit subsidy was given to industry across the country however the Power Division did not communicate this to KE which was the reason why KE was supplying cheaper electricity relative to other Discos. He urged the government to end the Rs 66 billion subsidy being given to industry in Karachi.
Additional Secretary informed the committee that the KE management had sought clarification from the Power Division regarding withdrawal of subsidy which has been issued.KE will now recover the amount of subsidy extended to the industrial sector which is around Rs 66 billion.
The representatives of Pakistan Steel Melters Association (PSMA) headed by Mian Iqbal also briefed the committee about the cumulative financial impact of Fuel Price Adjustment (FPA). He stated that the impact of FPA of three years has devastated steel melters business after they received additional bills of millions of rupees in the name of FPA. He suggested that the government should make it part of the regular tariff so they can adjust their business accordingly. He said, PTI government is earning a bad name for putting additional financial burden on steel melters.
The Nepra official, however, clarified that the FPA being passed on to consumers was for 15 months and not three years.
Chairman Standing Committee suggested that Senator Nauman Wazir Khattak and Senator Dilawar Khan should sit with steel melters and Power Division to sort out this issue.The committee also directed Fesco to install conductors on 60 KV line to improve voltage in Jamali Balochan (Khushab). The committee gave one month time to Fesco to resolve this issue which was constantly being raised by Senator Dr. Ghous Muhammad Khan Nizai. Besides others, the meeting was attended by Senator Siraj-ul-Haq, Senator Molvi Faiz Muhammad and Senator Muhammad Akram.
