Pakistan: Power sector circular debt surges to Rs 2.47 trillion
Feb 10, 2022
Islamabad [Pakistan], February 11 : Pakistan Tehreek-e-Insaf (PTI) has broken all previous records as the power sector circular debt during its regime reached the highest level of Rs 2,476 billion in the history of the country, local media reported.
Pakistan Today reported that the power sector circular debt has increased by Rs 196 billion to a record high of Rs 2,476 billion during the first six months (July-December) of the Fiscal Year 2021-22 as compared to the same period of the previous year.
The circular debt increased at a monthly average of Rs 32.50 billion from July to December, the reports said, adding that the volume of circular debt till August 2018 was Rs 1,148 billion which increased to Rs 2,476 billion by December 2021, according to the media report.
The circular debt piles up due to the gap between the cost of electricity generation, transmission and distribution and actual money collected on account of bills including the increase in tariffs and payment of subsidies.
Pakistan government's decision to increase electricity tariff up to Rs 0.95 per unit following the withdrawal of Rs 20 billion subsidy has compounded the power-consumers problem.
The federal government has filed a petition before National Electric Power Regulatory Authority (Nepra) to approve policy guidelines to withdraw Rs 20 billion subsidy in the second phase of the subsidy reduction plan, according to Express Tribune.
Earlier, Pakistan's government removed around 8 million power consumers from the subsidy net by reducing volume from 22 million to 13.9 million consumers. Now, in the second phase, the government is going to remove more consumers from the power subsidy network by withdrawing Rs 20 billion per annum subsidy.
Further, the power regulator on Monday held a public hearing relating to the approval of the Policy Guidelines under Section 31 of the Regulation, Generation, Transmission and Distribution of Electric Power Act, 1997 for Retargeting of Power Sector Subsidies Phase-II.
Earlier, Nepra had pointed out that the provision of subsidy was the mandate of the Federal government.
