Pakistan’s energy sector circular debt recorded an average monthly increase of Rs. 38 billion in the first six months of the fiscal year 2021-22.
The development was reported by Business Recorder, which mentioned that the total circular debt reached Rs. 2.476 trillion in the first six months of the ongoing fiscal year despite a number of vital reforms, up from Rs. 2.303 trillion in the corresponding period last year, depicting an increase of Rs. 196 billion as compared to Rs. 152 billion in July–December 2020–21.
For the period in review, GENCOs are owed Rs. 79 billion in payments from fuel suppliers while Power Holding Limited (PHL) is awaiting Rs. 904 billion. Moreover, unpaid subsidies fell by Rs. 8 billion in the first six months of this fiscal year as compared to a gain of Rs. 77 billion the previous year. The unbudgeted subsidies were Rs. 17 billion this year against a negative Rs. 5 billion in the previous fiscal year.
The interest charges on the delayed payments by Independent Power Producers (IPPs) surged by more than 60 percent to Rs. 67 billion in July–December 2021–22 when compared with Rs. 42 billion in the same period last year. It is pertinent to note that the average T&D loss in the power sector is 17 percent against a target of 13.4 percent.
A further breakdown of the producer-oriented data suggests that non-payments by K–Electric (KE) increased by Rs. 27 billion in six months in contrast with Rs. 40 billion in the same period last year, indicating a spike of Rs. 27 billion in non-payment with an average monthly growth of Rs. 11.2 billion.
Other miscellaneous data suggests that the unbudgeted subsidy for Azad Jammu and Kashmir and KE is estimated to be over Rs. 75 billion (AJK Rs. 46 and KE Rs. 29 billion). A subsidy dispute between KE and the federal government also resulted in a sum of Rs. 292 billion due from KE since June 2021.
The PHL and IPP stocks also reflect federal budget adjustments in the shape of repayment of Rs. 130 billion PHL debt and the settlement of outstanding arrears of Rs. 311 billion to IPPs during the ongoing fiscal year.
Conversely, the outstanding generation cost (QTA+ FCA) was trimmed by 16 percent to Rs. 100 billion in July–December 2021–22 in comparison with Rs. 119 billion in the same period during FY21.
The degree of inefficiency of distribution companies (DISCOs) was majorly observed to be Rs. 46 billion, which is up by 475 percent from Rs. 8 billion last year. Distribution companies’ under-recovery tallied Rs. 66 billion in six months this year as opposed to a negative Rs. 37 billion last year. Despite this development, last year’s recovery has plunged from Rs. 99 billion to Rs. 8 billion.
