Jul-Jan power sector circular debt soars to Rs2.635 trillion

Pakistan’s power sector circular debt has reached Rs 2.635 trillion during first seven months of (JulyJanuary) 2023-24 against Rs 2.626 trillion during the same period of 2022-23.

According to a government document, total payables to the power producers stood at Rs 1,760 trillion, followed by Rs 111 billion to generation companies’ (Gencos) payables to fuel suppliers, and Rs 765 billion as the amount parked in Pakistan Holding Limited (PHL) in fiscal year 2023-24. The unclaimed subsidies were reduced by zero in fiscal year 2023-24.

Meanwhile, the independent power producers’ (IPPs) interest charges on delayed payment were Rs 72 billion during seven months of 2023-24 - a drop from Rs 99 billion during same period of 2022-23

Businessman urges incoming govt to address circular debt issue

The pending generation cost, which is made up of quarterly tariff adjustments (QTA) and fuel charge adjustments (FCA), increased to Rs 214 billion in July January 2023-24 from Rs 139 billion during the same period of 2022-23. The dues pending on the part of K-Electric fell from Rs 102 billion to negative Rs 11 billion.

However, power distribution companies’ (Discos) losses due to inefficiency rose to Rs 86 billion during seven months of 2023-24 from Rs 69 billion in 2022-23.

Discos under recoveries have also increased to Rs 198 billion during July- January 2023-24 from Rs 1170 billion of 2022-23.

The amount of other adjustments (prior year recovery, etc.) has declined to 116 billion from Rs 210 billion during same period last year.

Payables to power producers increased by Rs 5 billion due to withdrawal by FBR in April-23, whereas

Rs 336.9 billion is receivable from KElectric as on January 2024.

In a press briefing on Friday, Julie Kozack stated: “During the period of the caretaker government, the authorities have maintained economic stability.

“This has been done through strict adherence to fiscal targets while also protecting the social safety net. It has been done by maintaining a tight monetary policy stance to control inflation and to continue to build up foreign exchange reserves.”

In a key development, Bloomberg News, citing a Pakistani official, reported on Thursday that Pakistan plans to seek a new loan of at least $6 billion from the International Monetary Fund to help the incoming government repay billions in debt due this year.

The country will seek to negotiate an Extended Fund Facility with the IMF, the report said, adding that the talks with the global lender were expected to start in March or April.