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Rs 566 billion Circular Debt accumulated from the power sector

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Circular debt of the country with regard to the power sector has soared to Rs 566 billion. The figure, however, does not include circular debt of around Rs 500 billion parked in the Power Holding Company Limited (PHPL).

While addressing a meeting of the Senate Special Committee on Circular Debt at the Parliament House on Wednesday, August 1st 2018, Waseem Mukhtar, Additional Secretary Power Division, stressed on the need to reframe policies with regards to the power distribution companies in Pakistan.

He apprised the committee on the remedial measures that should be taken to address the overall energy situation of the country and suggested that boards of these distribution companies must comprise of professionals that have no associated interests.

In a call for help, he also informed the committee that every distribution company had its own planning wing, which they ought to use to come up with new ideas and solutions that could go a long way towards easing the issues troubling the energy sector.

On his part, Managing Director of the National Transmission and Dispatch Company (NTDC), Zafar Abbas, complained that owing to massive costs associated with improving energy transmission, making any progress on the matter had become very difficult. He, however, informed the committee that a plan had been put in place to upgrade the transmission lines.

While discussing circular debt at the DISCOs level, it was observed that Banu, DI Khan, Charsadda and the Khyber Circle were most notorious in terms of electricity theft.  The percentage of recovery in these areas was less than 30 percent. Malakand Division was a top bill paying area.  

According to Peshawar Electric Supply Company (PESCO) officials, the company suffered total losses worth PKR 38 billion, with technical losses being reported at 38 percent againt the 15.7 percent allowed by the National Electric Power Regulatory Authority (NEPRA). As a result, officials stated that nothing is left for investments on local infrastructure after accounting for adminisrative and other expenses.

According to officials from the Hyderabad Electric Supply Company (HESCO), total annual line losses entailed Rs 27 billion. The percentage for Company losses was 30.7 percent.  Among the reasons cited for these losses, officials brought up interest on loans taken by the company, besides losses due to theft of electricity and low recovery. Political interference and poverty in Badin and Thatta were among the main factors for these lesser recoveries, they added. The representatives, however, claimed that their investments for gid station had increased during the recent years.

While discussing Balochistan and losses incurred in the province, Senator Usman Khan Kakar was of the view that the energy crisis in the province can only be resolved by resorting to Solar Energy. In the financial year 2017- 18 QESCO suffered losses worth PKR18.7 billion.

According to SEPCO officials, the company losses entailed Rs 9.5 billion whereas recovery was 60 percent. Convenor Committee, Senator Faraz pointed out that delay in the Patrind Project entailed losses worth USD 2 Crore due to capacity charges.

Convenor of the Committee, Senator Shibli Faraz, instructed the Power Division to provide the Committee with province wise details (Industrial/Domestic/Commercial) of running defaulters. He asserted that the Committee's target was to deal with the menace of circular debt.

Posted on: 2018-08-02T12:14:00+05:00

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