Rising circular debt
The circular debt continues its high pace with no check. It now stands at about Rs1.4 trillion. Presently increasing quantities of power sector inefficiencies are being consigned on to the consumer through diverse surcharges and high goal for losses allowed by Nepra. The power sector is calling out for good leadership.
Circular debt, which was tune to the Rs1.14 trillion during the tenure of the previous government, has now risen to Rs1.4 trillion. The energy sector's circular debt has attained Rs1, 362 billion marks, among which is Rs755 billion is of the Power Holding Company Limited and Rs607 billion of Standby Term Finance Facility loans. Circular debt commonly emerges out of high electricity losses which are owing to theft and ineffectiveness in the distribution system and incapability to improve the total amounts billed to consumers by power companies. This brings to a financial interval owing to which the power sector fails to release its discharge towards fuel suppliers and banks. These in return badly affect one and the other the energy and financial sectors.
More than 12,000MW power plants to be finished with the $25 million investment in energy sector under CPEC. November 30, 2018 Rs36.2billion was payable to generation companies running plants on gas and re-liquefied natural gas, Rs83.5billion to oil-based companies, Rs450.5billion to independent power plants, Rs28.6billion to nuclear plants and Rs156.7billion to the National Transmission and Dispatch Company. With the help of the Asian Development Bank, the government was going to introduce the Advance Metering Infrastructure project in the areas covered by the Lahore Electricity Supply Company and the Islamabad Electricity Supply Company at a price of $40 million. In the second stage, the project will be enlarged to the Peshawar Electricity Supply Company, Multan Electricity Supply Company, Hyderabad Electricity Supply Company and other areas with high power theft cases. The second phase of the project will be priced at $500million. The power division had initiated a push to bring to book the elements involved in power theft both within the distribution companies and consumers. A confusing operation was being conducted out against thieves and so far appropriate police stations had been accessed to order about 15,746 FIRs against 21,475 thieves. About 11,356 of them had been listed.
Pakistan had intended to take the share of renewable energy in the energy mix to about 25 percent by 2025 and to approximately 30 percent by the year 2030. Currently total installed capacity is about 33,836 megawatts (MW) and de-rated capacity approximately 31,006MW. Total hydel power production is somewhat 9,730MW and total generation by Gencos is roughly 5,682MW of which 4,177MW is de-rated production. Total capacity of thermal plants run by IPPs is somewhat 15,186MW and their de-rated capacity 13,973MW.Total installed capacity of nuclear plants is some 1,345MW and de-rated capacity not from 1,246. Solar capacity is out near 400MW, wind not far from 1,185MW and Bagasse-based plants' installed capacity is generally 306MW with de-rated capacity of abbot 295MW. Hydel contributes is almost 27percent of the total installed capacity, LNG 26 percent, natural gas is all but about 12 percent, furnace oil not far from 16 percent, coal may be 9 percent and renewable and nuclear is out near 5percent respectively.
With over all investment of $25billion under the ChinaPakistan Economic Corridor, power plants of 12,334MW capacity would be finished. The CPEC has 18 preference projects with a capacity of 11,110MW with an investment of about $21.7billion and three vigorously nurtured projects with a capacity of about 1,224MW and total investment of approximately $3.3billion.
Power sector is to obtain about somewhat Rs817.5 billion from private and government clients. On the other hand power consumers are paying Rs159 billion on taxes in electricity bills.
The past government is assumed to have gained improvement in power production; it passed on a huge circular debt of Rs1.148 trillion to the new government of Pakistan. The past government had come along with a watch word in 2013 that it would bring load-shedding to an end during its five-year period. It entirely concentrated on establishing thermal power plants to accelerate electricity production, but failed to speed up and improve the transmission and distribution network, which could not endure the burden of increase power generation.
The circular debt has become a heavy task for all governments, as well as the Pakistan Peoples Party, which governed from 2008-13. The condition is no distinct for the recent government which will have to deal with a debt burden of over Rs1 trillion. Out of the total circular debt, Power Holding Private Limited had borrowed an amount of about Rs582.86 billion on the other hand of some Rs566 billion was borrowed to shield receivables of power distribution companies. It was disclosed that the Central Power Purchasing Agency was obtaining about Rs66 billion out of the Rs100 billion charged in electricity bills.
The circular debt has again emerged the weak economy of Pakistan. The government has recommended issuing Rs200 billion Sukuk bonds to control the debt which will issue for a year or two but not solve the problem. The morally required government had pledged to settle the problem of circular debt during the election contest and now it should come up to its pledge.