The Power Division has decided to do monthly circular debt reporting, mentioning the factors contributing to the build-up of the country’s circular debt build-up.
It is worth mentioning that the power sector is the biggest contributor to Pakistan’s circular debt, and the incumbent government under Imran Khan has vowed to solve the issue.
During a briefing, the incumbent Minister for Energy, Hammad Azhar was informed regarding the current circular debt stocks of value Rs2.3 trillion.
According to Tribune, the former finance minister was briefed on the ongoing developments in the power sectors including the ongoing projects under the Power Division. These projects included major transmission and distribution improvement targets.
It must be noted that the Public Sector Development Programme (PSDP) portfolio of the Power Division for the fiscal year 2020-21 is Rs74.5 billion, of which a major portion is contributed by distribution companies (DISCOs) and National Transmission and Despatch Company’s (NTDC) own resources.
One of the most important projects is the 4000-megawatt Matari-Lahore HVDC transmission line which was supposed to be launched in April, has been delayed for six months till September 2021, owing to a failed test.
Other Projects include the CASA-1000, coming from the Kyrgyz Republic and Tajikistan to Pakistan and Afghanistan, allowing the two power-abundant countries in Central Asia to sell their electricity surplus during the summer months to the deficient countries in South Asia. It will come to Pakistan starting using HVDC transmission from Sangtuda in Tajikstan to Gulbahar in Afghanistan and ending in Nowshera, Pakistan.
Read More: CPEC Matiari-Lahore Transmission Line project delayed for 6 months
Power Consumers to pay 1.1 trillion
According to national media reports, the capacity payments in the IPPs have continued to rise and will reach a high of Rs1.6 trillion in 2003. The payments have increased 220% since the incumbent government took power in 2018.
The current government had signed a deal with the IPPs to reduce the cost and set a payment system that would be much feasible, according to the government, for the country. However, the National Accountability Bureau had certain concerns and led to the deal not going through.
Thus, the cost of idle plants has been transferred to the consumers of the electricity, and the government conveniently blamed the increases in electricity rates on the faulty deals by the former PML-N government.
However, the fact is that government would have to pay back the IPP and has to increase the tariff to recover capacity charges.
Moreover, the government has to bring the electricity thieves into the legal net to cut the losses of the IPPs, and for that might have to give an amnesty scheme to set up legal connections, by forgoing the previous cost incurred due to the illegal actions of such thieves. However, till then, the honest consumers throughout the country would continue to suffer.
Read More: CCOE approves circular debt mitigation plan
The bleeding distribution companies are the major source of the losses, and if the losses are not cut, the consumers will suffer a huge cost in the future.