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Pakistan’s Power Sector Circular Debt Falls by RS336billion

The power sector’s circular debt has decreased by Rs336 billion amid ongoing efforts to curtail the cascading cycle of non-payment.

The debt is owed to several power-related entities, and some subsidies and charges also changed over the years, moving down in recent times. The debt is a vicious cycle of unpaid bills in the power sector, preliminary from the power generation end of the process, and going all the way to the distribution process to recovery and electricity theft.

Data shared from the energy ministry’s Power Division shows circular debt plunged by Rs336 billion to Rs2.3 trillion in June this year as compared to a hike of Rs15 billion in the previous month.

In Fiscal Year 2023, the stock of circular debt saw a jump of Rs57 billion as compared to a decrease of Rs27 billion in the same period last year.

It also revealed that the amount payable to power producers moved up by Rs83 billion last year, touching Rs1.4 trillion and similarly, Power Generation Companies’ (GENCOs) debt to fuel suppliers increased by Rs10 billion.

The recent data revealed that during the full year, Power Generation Companies owed Rs111 billion to fuel suppliers. Contrariwise, the amount left in Power Holding Limited (PHL) has been slashed by Rs35 billion during FY23 from Rs800 billion last year to Rs765 billion in June.

It further maintained that the government added Rs100 billion to circular debt on account of independent power producer’s interest charges on delayed payments while the pending generation cost added Rs250 billion in FY23.

Let it be known that the increase of Rs396 billion due to losses inefficiencies by power distribution companies and under recovery of bills was compensated by a major slash in Other Adjustments of Rs447 billion.

Furthermore, payments through fiscal space posted a decrease of Rs162 billion during last year.

Source: Pakistan Observer