Karachi Water & Sewerage Board (KWSB) has approached the Ministry of Finance (MoF) to resolve the circular debt issues under which KWSB was facing acute financial crisis. In a letter sent to secretary of MoF dated October 20, KWSB requested the ministry that the dues it owed to Karachi Electric Supply of Company (KESC) swelled to at least Rs14 billion while its receivables from the federal government departments have also reached the same amount. The ministry should urgently resolve the issue through an adjustment mechanism.
In order to resolve the circular debt issue, the board has suggested a mechanism, through which the federal government should directly pay the dues of KESC to Sui Southern Gas Company, so that KESC can erase the outstanding dues of KWSB. This will help KESC receive adequate gas supply from SSGC, which is essential to meet the increasing electricity demand of its consumers including our pumping stations. In the letter, KWSB said that due to the board’s current financial situation, the water supplying organisation of Karachi was not being able to release payments to KESC; leading to increasing overdue payables, KESC has thus disconnected power supply to various KWSB facilities. The board confirms that an amount of Rs14.00 billion excluding surcharge, has been accrued (amount payable) with respect to outstanding payment for utilisation of electric energy supplied by KESC up to the month of September 2011.
According to the letter, the boards confirmed that an amount of Rs14.00 billion excluding surcharge, has been accrued (account payable) due to outstanding payment of electricity supplied by KESC up to the month of September 2011, but KWSB has to receive same amount of dues from various Federal Government departments. “To address the dire situation, we are making a payment of Rs50 million immediately and Rs50 million by the end of October 2011. For future payments a meeting under the Chairmanship of Governor Sindh is scheduled at Governor House this week to agree upon a payment plan”, it added. The board further said, “We are already working on the issue, to increase our monthly collections from our customers and we have made some significant efforts and plans which will lead to increase in revenue of KWSB but considering the aforementioned situation of KWSB, we request the federal authorities to take an urgent action in this regard.”
