The total circular debt on power generation companies swelled to Rs 337.7 billion in the current fiscal year, out of which Rs 180 billion is owed to state run Pakistan State Oil (PSO), a source at the company said on Thursday.
“Despite regulatory measures, the circular debt of the country has exceeded the benchmark of Rs 126 billion set by the International Monetary Fund (IMF),” the source said.
“The government is not taking any measures to retire this debt while the obstacles for oil marketing companies have been increasing in the absence of cash liquidity,” the official of the PSO said.
The circular debt has increased 3.6 per cent or Rs 11.7 billion during the last five months since last September 2015. This debt is rising by Rs 2.4 billion per month compared to Rs 15 billion per month during the whole fiscal year 2015 and Rs 18 billion per month in 2014.
The declining trend in debt in the last few months is due to falling cost of power generation. During the first eight months of 2015-16 cost of generation on HSD/FO fell 40 per cent and 51 per cent respectively compared to the corresponding period of 2014. Meanwhile the growth in generation over the period is 5.6 per cent year on year to 65.6 GwH generated over eight months of the current fiscal year.
While the growing share of gas in power generation was 28.2 per cent at the highest point in July-Feb 2015-16 compared to 20.6 per cent for July-Feb 2014-15. On furnace oil share of power generation was 30.3 per cent in the current fiscal year compared to 33.8 per cent in the same period last year. Similarly, on high speed diesel (HSD), this share stood at 1.8 per cent during the last eight months compared to 3.2 per cent in the same period last year.
The source said the previous government receivables on the provincial governments stood at Rs 210 billion, meanwhile the total current receivables are Rs 657.3 billion. At present receivables from the provincial governments stand at Rs 104 billion while Rs 60 billion and Rs 32.5 billion have been outstanding against Azad Jammu and Kashmir and Karachi Electric (KE) respectively.
The government has claimed that circular debt piles up mainly due to non-availability of required funds to pay off the liabilities of power generators.
The main defaulting companies of PSO are WAPDA, CAPCO, and Hub Power Company, the official claimed.
At the start of 2015-16, the government took steps to reverse the tide of monthly increases in debt. They included 1) imposition of additional surcharges (Rs 1.54/KwH in rationalisation, Rs 0.43/KwH as Debt Servicing Surcharge and Rs 0.1/KwH for Neelum Jhelum), 2) structural adjustments in power sector, altering the functioning of NTDC, CPPA (G) and setting Multi Year Tariffs for DISCOs with operational benchmarks attached and 3) privatisation accompanied by improved governance and accountability.
Despite all this, circular debt is likely to remain higher than the IMF imposed benchmark of Rs 126 billion, if the prevailing scenario of non-recoveries (provinces owe Rs 104 billion in overdue payments) remains, the analyst said.
The consumers using below 50 units per month are being charged at Rs 2.00 per unit. Those using between 1-100 units are charged at Rs 5.79 per unit while those consuming between 101 to 200 units are charged at Rs 8.11 per unit. The tariff for use of 201-300 units per month is Rs 10.20 whereas for monthly electricity consumption of between 301 to 700 units, the rate is Rs 16.00 per unit. The consumers who use above 700 units per month are charged Rs 18.00 for each unit.
This price is excluding all taxes and surcharges Ministry of Water and Power imposes on the consumers. The disparity among rates is to discourage electricity wastage.