PM’s help being sought for recovery: Govts owe Rs111bn to Power Division

A cash-strapped Power Division has reportedly decided to seek Prime Minister’s help to recover arrears of Rs 111 billion from Federal and Provincial Governments, well informed sources told Business Recorder.

The sources said that regarding Rs 20.364 billion arrears of the federal government, Defence Ministry is on top of the list of defaulting federal ministries with arrears of Rs 11.5 billion, followed by Ministry of Interior, which has to pay Rs 3.066 billion. The third highest defaulting ministry is the federal ministry of Water Resources, which has to pay Rs 2.423 billion.

According to the list of defaulters, prepared for the Prime Minister, the amount of arrears against Ministry of Housing and Works stood at Rs 225.8 million, National Culture and Heritage Division Rs 79.821 million, Aviation Division Rs 126.6 million, Ministry of Communication Rs 342.6 million, Ministry of Information & Broadcasting Rs 441 million, Federal Education and Professional Training Division Rs230.5 million, Petroleum Division Rs 100 million, Ministry of National Health Services, Regulations and Coordination Rs 349.6 million, Ministry of States & Frontier Regions Rs 998.4 million, Ministry of Finance Rs 208.6 million, Ministry of Railways Rs 243.2 million, Ministry of Industries and Production Rs 21.9 million, Ministry of Inter Provincial Coordination Rs 29.6 million and Election Commission of Pakistan Rs16 million.

The amount of total arrears against provincial governments stood at Rs 90.693 billion, of which Punjab government has to pay Rs 16.392, Sindh government Rs 27.362 billion, Balochistan government Rs 25.352 billion and KP government Rs 21.588 billion.

However, the troubling energy sector’s circular debt has already reached Rs 2.358 trillion during the first seven months (July-Jan) of 2021-22 compared to Rs 2.331 trillion in corresponding period of 2020-21 due to reduction in amount parked at Power Holding Limited (PHL) and Genco payables to fuel suppliers.

The stock of unpaid subsidies has been reduced by Rs 83 billion to Rs 12 billion from Rs 95 billion during the first seven months of current fiscal year. However, the volume of unbudgeted subsidy touched Rs 1 billion during this period from negative Rs 10 billion in the same period last fiscal year.

The sources maintained that IPPs’ interest charges on delayed payments reached Rs 70 billion, against Rs 47 billion in comparable period last year, posting a growth of 49 per cent.

The volume of non-payment by K-Electric (KE) has reached Rs 79 billion during the first seven months of current fiscal compared to Rs 47 billion during the corresponding period of last year posting a growth of about 68 per cent.

The amount due to Discos’ inefficiency was recorded at Rs 48 billion in first seven months of current fiscal year against Rs 7 billion in the same period last year, showing an increase of 586 per cent.

Discos’ under recoveries remained at Rs 79 billion during July-Jan 2021-22 of current fiscal year from negative Rs 27 billion. PHL mark-up has decreased to Rs 16 billion from Rs 37 billion.

The other adjustments including QTA+ FCA stood at Rs 119 billion during first seven months of mentioned period as compared to Rs 128 billion in the corresponding period of previous fiscal.

Other adjustments (prior year recovery, etc.) declined to negative Rs 42 billion during July-Jan, 2021-22 from negative Rs 108 billion in corresponding period of previous fiscal year.

This implies that flow in circular debt has increased by over 80 per cent to Rs 381 billion during July-Jan, 2021-22 from Rs 211 billion in corresponding period of FY 2020-21 in different accounts.

The unbudgeted subsidy including AJK and KE is around Rs 75 billion (AJK Rs 46 and KE Rs 29 billion). An amount of Rs 372 billion is receivable from KE as on Jan 2022 pending due to subsidy dispute between power utility and the GoP.

The sources said, Power Division has initiated a country-wide recovery campaign to enhance recoveries of Discos in order to improve their financial health and to enable them to timely pay-off power purchase cost to avert unnecessary accumulation of supplemental charges which cause increase in the circular debt. For this purpose, Power Division has approached the concerned Secretaries of Federal Ministries/ Divisions, as well as, the Chief Secretaries of the Provincial Governments for payment against the outstanding dues indicating the huge receivables of Discos against their respective departments.

Power Division maintains that receivables on one hand are creating cash constraints for the Discos and on the other impacting on their cash flows/ performance. This trend has a heavy toll on performance of power sector especially in shape of ever-increasing circular debt which has severely impacted on socioeconomic development in the country.

Power Division has proposed that necessary instructions may be imparted to the Federal Ministries/ Divisions and Provincial Governments for clearing their respective outstanding bills of electricity and for ensuring timely payment of electricity dues in future.

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