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Power sector’s payables cross Rs275bn mark

Discussion in 'Pakistan Economy' started by DesiGuy, Jan 3, 2011.

  1. DesiGuy


    Jul 27, 2009
    +1 / 2,303 / -4
    United States
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    ISLAMABAD: The power sector’s payables have crossed the Rs275 billion mark with gas utilities and the Federal Board of Revenue facing the blame for ‘discriminatory’ reduction in gas supply and non-payment of tax refunds, resulting in continued increase in electricity tariffs and growing cash flow problems.

    A power ministry official said the average quantity of gas required by the power generation companies was 780 million cubic feet per day (mmcfd), but they were getting only 301mmcfd.

    “If full gas supplies are ensured to the power sector the electricity generation could increase by 1500MW per day, which can reduce its production cost by almost one third,” he said.

    But the most staggering revenue loss is occurring because of the power sector’s system losses.

    According to the power ministry estimates, Wapda companies are losing more than Rs125 billion every year on account of system losses. This does not include the KESC figures.

    The authorities, on the basis of a business plan made by the power sector, have estimated to increase tariff by 15 per cent (either in one go or 3 per cent every month) in the next six months and reduce losses by about 2 per cent to recover from consumers the full cost of power generation.

    The plan also envisages additional gas supply of 350mmcfd of gas, otherwise the tariff would need to be jacked up by more than 25 per cent. This much of gas supply, if ensured, could reduce the generation cost by Rs54 billion a year.

    The power companies have sought 200mmcfd of additional gas supplies for Kot Addu Thermal Power Plant to run it in a cost-effective manner. In 2207, the Sui Northern Gas Pipelines Ltd reduced supply to Kapco to 70mmcfd before stopping it altogether after some time.

    The power companies claim that gas utilities cut the approved gas quota unilaterally and diverted it to other sectors without the government’s approval.

    The power ministry also said that 110mmcfd from Mari gas field has been diverted from Guddu Thermal Station to a private firm, Fatima Fertiliser.

    In return, gas from Kandkot and Mari Deep had to be provided to Guddu under a commitment of the government. But that commitment remained unfulfilled.

    Against the prime minister’s instructions in April last year for 183mmcfd, only 60mmcfd of gas is being supplied to the power sector from the Mari Shallow.

    As of Nov 15, the power sector’s receivables stood at Rs305 billion, including about Rs52 billion from the Karachi Electric Supply Company.

    The outstanding dues against private consumers stand at about Rs125 billion, including Rs25 billion to be paid by permanently disconnected private defaulters.

    An amount of Rs72 billion is outstanding against running defaulters besides spillover private sector bills of Rs22 billion.

    The four provincial governments have outstanding electricity bills of about Rs58 billion, including Rs31 billion of Sindh, Rs14 billion of Balochistan, Rs12 billion of Punjab and Rs1.5 billion of Khyber Pakhtunkhwa.

    Another Rs6 billion electricity bills are outstanding against the federal government and its agencies and Rs2 billion against defence authorities.

    Of the total payables of Rs275 billion, the power companies have to pay Rs165 billion to independent power producers, Rs17 billion to gas companies, Rs35 billion to oil companies, Rs48 billion to Wapda hydropower companies and Rs12 billion to transmission and generation companies and rental power projects.

    Power sector?s payables cross Rs275bn mark | Pakistan | DAWN.COM