Pakistan's power sector circular debt reaches Rs2.66tr as of May

September 25, 2024 (MLN): Pakistan's power sector circular debt has increased by Rs345 billion from July to May 2024 (11MFY24) to reach Rs2.66 trillion, compared to the debt worth Rs2.31tr by the end of fiscal year 2023 (FY23).

In the same period last year (11MFY23), circular debt was recorded at Rs2.65tr; compared to that, the current debt has increased slightly by 0.34%.

According to the breakup provided in the debt report released by the Power Division, the rise compared to the previous fiscal year is attributed to a number of reasons, with an increase of Rs279bn in the DISCOs under recoveries being the most crucial one.

Additionally, DISCOs losses inefficiency also observed a substantial rise of Rs230n in these 11 months compared to FY23.

The pending generation costs of Quarterly Tariff Adjustments and Fuel Cost Adjustment showed a rise of Rs176bn.

Moreover, the interest charges borne by Power Holding Limited (PHL) and Independent Power Producers (IPPs) within the power sector rose by Rs72bn compared to FY23, worsening the debt situation.

On the other hand, the data further shows that the dues by K-Electric during this period decreased by Rs48bn.

A notable drop was also observed in prior year recoveries (other adjustments) and stock payments worth Rs155bn and 284bn, respectively in 11MFY24 compared to FY23.

However, with the burden of dues, inefficiencies, and losses increasing significantly, the country incurred additional circular debt.

The power division attached two important notes in the report. Firstly, it mentioned that the amount payable to power producers increased by Rs5bn due to withdrawal by the FBR in April 2023.

Secondly, it noted that Rs177.2bn is receivable from K-Electric as of January 2024.

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