ISLAMABAD: According to a report by the Ministry of Energy, the revolving credit of the power sector has reached Rs 2.646 trillion by the end of May 2023, with an increase of Rs 394 billion from July 2022 to May 2023.
The rising debt has become a major concern for the government and power sector policy makers, as it indicates monthly inefficiencies in the energy system, particularly in generation and distribution, resulting in losses of Rs 35.82 billion per month ( $132.2 million) incurs an additional burden.
This is despite the government’s implementation of a basic tariff hike for electricity last July, following pressure from the International Monetary Fund (IMF), which rejected the idea of closing the gap between power holding companies. had called for tariff measures to reduce
Despite a significant tariff hike of Rs 7.9 per unit in July 2022, the revolving credit continued to rise as infrastructural issues in the sector remained unaddressed, leading to significant financial burden on loyal electricity consumers. The amount of which is billions of rupees every month. .
The data shows that the gross debt volume was Rs 2.253 trillion by the end of the financial year 2021-22, which rose to Rs 2.646 trillion by the end of May 2023.
Meanwhile, dues to power producers increased from Rs 420 billion to Rs 1.771 trillion during these 11 months. Government-owned generation companies (GNCOs) also saw their payments to fuel suppliers increase from Rs 101 billion to Rs 110 billion during the same period.
However, a positive development was seen in the amount of outstanding debt at Power Holding Limited (PHL), which decreased by Rs 35 billion to Rs 765 billion from the previous figure of Rs 800 billion recorded at the end of June 2022. went
Inefficiencies of power distribution companies (DISCOs) have emerged as a significant burden on the financial health of the power sector, mainly due to their high losses and low bill recovery.
These shortfalls in power transmission and distribution are hampering the sustainable provision of energy services, resulting in higher energy prices and increased business costs.
During the eleven-month period, electricity distribution companies (DISCOs) faced losses and inefficiencies with non-receipt of bills, contributing Rs 374 billion to revolving debt, out of total debt of Rs 394 billion. 95% of the increase is Stock
Losses and inefficiencies of DISCOs during July-May 2022-23 were worth Rs 125 billion while low bill collections added Rs 249 billion.
The increase in revolving debt further revealed that Rs 87 billion was owed to power generators on account of interest payments on delayed payments, while the government currently owes these generators Rs 1.77 trillion.
Additionally, circular debt increased by Rs 58 billion due to interest payments to banks on Rs 765 billion held in the Power Holding Company.
To address this issue, the government has imposed a debt servicing surcharge of Rs 3.23 per unit, which the electricity consumers have to pay for the inefficiencies.
Additionally, Rs 171 billion was included in circular debt due to delay in recovery of cost of production through quarterly and monthly fuel charges adjustment. Due to non-payment by K Electric, the stock of loans increased by Rs 57 billion.
