The country is still facing over Rs 500 billion circular debt due to non-payment of dues by different stakeholders in the power an oil sectors, Business Recorder has learnt. Analysts claim this is significant, given the government’s most recent policy intention document, or Letter of Intent submitted to the International Monetary Fund, dated September 10, 2010 where it states.
“We remain committed to reform the electricity sector in order to eliminate tariff differential subsidies and resolve circular debt.” The time period for compliance with this critical condition as noted in the LoI is challenging. It says: “We are working actively to deliver these reforms and thus remain confident that the fifth review under the Stand By Arrangement can be completed later this year.”
The Pakistan Electric Power Company (Pepco) is to pay Rs 200 billion to its fuel and electricity suppliers and is to receive the same amount from federal, provincial governments and private consumers. “Pakistan State Oil (PSO) is to receive Rs 142.979 billion and to pay Rs 123.963 billion to local and international fuel suppliers,” sources said.
According to details available with Business Recorder, PSO was to receive Rs 47.97 billion from Wapda, Rs 57.6 billion from Hubco, Rs 25.1 billion from Kapco, Rs 164 million from PIA, Rs 443 million from OGDC, Rs 1.51 billion from KESC, Rs 1.38 billion for price differential claims (PDCs) on HSD, and Rs 3.87 billion PDC on imported PMG. PSO is to pay Rs 36.13 billion to Parco, Rs 13.7 billion to PRL, Rs 9.49 billion to NRL, Rs 25.35 billion to ARL, Rs 4.55 billion to Bosicor and Rs 34.033 billion to international fuel suppliers.
When contacted, Pepco Managing Director Tahir Besharat Cheema confirmed that the country was still facing around Rs 500 billion circular debt. He said that during the present government’s tenure, 1900 MW installed capacity of power generation had been added to the power system. “Provision of less gas to power sector is the main problem,” he said.
He added that power generation companies were operating on full production capacity despite circular debt issue. “Gas supply suspension has been suspended from Kandhkot gas field, causing power generation shortfall of 1000 MW,” he added.
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