affanpervez
Minister (2k+ posts)
CIRCULAR DEBT SWELLS TO RS90B IN JUST 2 MONTHS
Usman Cheema
ISLAMABAD - Circular debt, which since long is being discussed to be one of the major reasons behind the energy crisis in the country, has again swelled to Rs 90 billion within just 2 months after the govt cleared the previous amount of Rs 503 billion at the start of July 2013.
Reliable sources told TheNation that circular debt is again increasing very rapidly that might increase the energy shortfall thus making the situation worse for the consumers. The government had cleared the previous circular debt of Rs 503 billion and it was expected that it might not increase again this fast and meanwhile the measures would be taken to bridge the difference between the cost of electricity and its price. Moreover energy theft will be controlled that too would help avoiding circular debt. The sources said that whatever the government claims, circular debt cannot be avoided under the present existing situation of power sector. They said that there are multiple reasons behind the menace of circular debt.
First of all the line losses are 5 per cent more than the approved limit of Nepra. Line losses at the moment are more than 20 per cent whereas Nepra has given the target to the government to reduce it to 16.5 per cent and upon this figure the cost of electricity is calculated. In case of more losses than the approved limit, the government has to fill the gap to pay off the bills by the power sector that they owe to oil and gas companies.
The second reason the sources mentioned was short recoveries of electricity bills by Wapda. Sources revealed that previous year there were 11 per cent short recoveries that simply mean more than Rs 100 billion receivables after a year that cause power sector suffer in terms of shortage of funds to pay its bills.
The third major reason that the sources told behind the circular debt was that the cost electricity was calculated around Rs 14.70 but the NEPRA’s approved tariff is Rs 8.89 per unit and there is a gap of Rs 5.81 per unit that ultimately has to be paid by the government. Sources further said that around 92 billion units are consumed in 12 months and around 8 billion units in one month averagely as more units per month are consumed in summer and that decreases in winter but with this much difference in cost and price, there is no way that circular debt could be controlled.
The recent move to increase the power tariff aims to decrease that difference to overcome the circular debt issue. Critics of this policy whereas believe that it is unjust to make the innocent consumers pay for the thieves as well. Certain quarters believe that the government should take stern action against the power thieves and should control the line losses to bridge the gap between cost and price of electricity.
But whatever the reasons are the government is responsible to tackle the situation in the larger interest of the consumers, the sources said. They said that at the moment PSA owes Rs 59 billion from generation companies that include Hubco Rs 9 billion, KESC Rs 12 billion and Rs 1.1 billion from two IPPs Saba and Southern Power Company.
KAPCO is only power plant which is making timely payment and has not to pay any dues to PSO this time after clearing circular debt. Sources said that PSO was to receive some amount on account of price differential claims on imported petroleum products and dues against some other clients.
http://www.nation.com.pk/pakistan-n...ircular-debt-swells-to-rs90b-in-just-2-months
Usman Cheema
ISLAMABAD - Circular debt, which since long is being discussed to be one of the major reasons behind the energy crisis in the country, has again swelled to Rs 90 billion within just 2 months after the govt cleared the previous amount of Rs 503 billion at the start of July 2013.
Reliable sources told TheNation that circular debt is again increasing very rapidly that might increase the energy shortfall thus making the situation worse for the consumers. The government had cleared the previous circular debt of Rs 503 billion and it was expected that it might not increase again this fast and meanwhile the measures would be taken to bridge the difference between the cost of electricity and its price. Moreover energy theft will be controlled that too would help avoiding circular debt. The sources said that whatever the government claims, circular debt cannot be avoided under the present existing situation of power sector. They said that there are multiple reasons behind the menace of circular debt.
First of all the line losses are 5 per cent more than the approved limit of Nepra. Line losses at the moment are more than 20 per cent whereas Nepra has given the target to the government to reduce it to 16.5 per cent and upon this figure the cost of electricity is calculated. In case of more losses than the approved limit, the government has to fill the gap to pay off the bills by the power sector that they owe to oil and gas companies.
The second reason the sources mentioned was short recoveries of electricity bills by Wapda. Sources revealed that previous year there were 11 per cent short recoveries that simply mean more than Rs 100 billion receivables after a year that cause power sector suffer in terms of shortage of funds to pay its bills.
The third major reason that the sources told behind the circular debt was that the cost electricity was calculated around Rs 14.70 but the NEPRA’s approved tariff is Rs 8.89 per unit and there is a gap of Rs 5.81 per unit that ultimately has to be paid by the government. Sources further said that around 92 billion units are consumed in 12 months and around 8 billion units in one month averagely as more units per month are consumed in summer and that decreases in winter but with this much difference in cost and price, there is no way that circular debt could be controlled.
The recent move to increase the power tariff aims to decrease that difference to overcome the circular debt issue. Critics of this policy whereas believe that it is unjust to make the innocent consumers pay for the thieves as well. Certain quarters believe that the government should take stern action against the power thieves and should control the line losses to bridge the gap between cost and price of electricity.
But whatever the reasons are the government is responsible to tackle the situation in the larger interest of the consumers, the sources said. They said that at the moment PSA owes Rs 59 billion from generation companies that include Hubco Rs 9 billion, KESC Rs 12 billion and Rs 1.1 billion from two IPPs Saba and Southern Power Company.
KAPCO is only power plant which is making timely payment and has not to pay any dues to PSO this time after clearing circular debt. Sources said that PSO was to receive some amount on account of price differential claims on imported petroleum products and dues against some other clients.
http://www.nation.com.pk/pakistan-n...ircular-debt-swells-to-rs90b-in-just-2-months
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