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Power tariff has risen by 40pc, Circular debt jumps by 106.39pc since July 2018, NA body told

muhammadhafeezmalik

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Circular debt jumps by 106.39pc despite 40.27pc hike in power tariff: NA body

| In June 2018, circular debt was Rs1126b which has reached Rs2324b during 3-year tenure of govt

The Power Division on Monday conceded that electricity rates had been increased by over 40 per cent and yet circular debt had almost doubled since July 2018, mainly because of insufficient subsidy payments.


Testifying before the National Assembly’s Standing Committee on Power, Additional Secretary of the Power Division Waseem Mukhtar said the base electricity tariff, which stood at Rs11.72 per unit in June 2018, is now Rs16.44, showing an increase of Rs4.72 per unit.


Another Additional Secretary Dr Musaddiq Ahmed Khan also confirmed that some incidents of partial overbilling had actually occurred in some distribution companies (Discos) because of extended meter-reading cycles on Eid and Ashura holidays, saying he would not defend such an exercise.


The standing committee’s meeting was presided over by MNA Chaudhry Salik Hussain and attended by MNAs Sher Akbar Khan, Ghulam Bibi Bharwana, Saifur Rehman, Lal Chand, Sabir Hussain Kaimkhani, Saira Bano, Mian Riaz Hussain Pirzada, Zahid Akram Durrani and Syed Agha Rafiullah, besides a team of the Power Division led by Secretary Ali Reza Bhutta.


The issue of overbilling was raised by Agha Rafiullah from Karachi. He said the consumers in the city had been overcharged by K-Electric through delayed meter reading, resulting in a number of days going beyond 30 or 31 days a month.


Some other members also talked about similar practices in state-owned Discos as well and said it was a matter of serious concern and required an in-depth probe.


National Electric Power Regulatory Authority (Nepra) vice chairman Rafique Ahmad Shaikh told the committee that the regulator had directed KE and other Discos to submit detailed reports, but the regulator had not received any complaint from consumers.


Dr Mussadiq said a detailed report had been received and he would not hesitate to confirm that episodes of over-reading because of higher number of days had actually taken place on a limited scale due to holidays. For example, he said, Lahore Electric Supply Company had a total of 46 meter-reading batches and in six batches reading was taken after 31 days.


Agha Rafiullah said it was a negligence on the part of Nepra which had become a ‘white element’ as billions of rupees of burden had been passed on to the consumers.


He was joined by other members in demanding that these overbillings should be reversed and common people should not be burdened because of limitation of companies or those responsible for overseeing them.


The Nepra vice chairman, however, said the regulator’s technical adviser had sought complete reports from all Discos as well as KE. He said the adviser was examining the reports on the basis of which Nepra would hold an open public hearing for all Discos and KE.


The standing committee was informed by Additional Secretary Waseem Mukhtar that electricity tariff was increased by Rs1.95 per unit in February, out of Rs3.34 per unit determined by the regulator. He said the government did not pass on the remaining Rs1.39 per unit increase to the consumers and it was also a political decision as to when the government decides to shift this burden to the consumers.


The NA committee took up the issue of circular debt and expressed concern that it had doubled despite regular increase in electricity prices.


In a report shared with the committee, the power ministry said circular debt had reached Rs2.324 trillion by July this year, mainly due to unpaid government subsidies which led to accumulation of debt on distribution companies.


Additional Secretary Mukhtar said the independent power producers (IPPs) had an overdue amount of Rs1.3tr.


Salik Hussain, the committee’s chairman, observed that the IPPs had been manipulating and maneuvering the tariff for a good enough time, but it was high time that their agreements were renegotiated and consumers given relief in electric bills.


The committee noted that the resolution of circular debt was necessary to ease supply constraints but the task was no doubt challenging since it required the outstanding stock of circular debt to be cleared before plugging further build-up of circular debt receivables.


The committee members suggested that recovery may be done through the revenue department and incentives should be given on recoveries.


The committee also appointed a subcommittee comprising Lal Chand MNA as convener and Syed Ghulam Mustafa Shah, Sabir Hussain Kaim Khani and Saira Bano as members to discuss and make recommendations for resolving the issues faced by the legislators with respect to KE, Discos and generation companies in Sindh.


Published in Dawn, September 21st, 2021

 

Mav3rick

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This was bound to happen because we mostly use imported Oil/Coal/Gas to generate power; when you artificially allow the USD to go as high as Rs. 170 then this will happen because every import gets lots more expensive. And on top of that all, there are compound effects such as Transportation of the same Oil also becomes more expensive and so on.

But, if nonsense is to be believed, USD at 170 is good for Pakistan and is bad at 104!! Fortunately (or NOT), we have many who believe that BS!
 

muhammadhafeezmalik

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This was bound to happen because we mostly use imported Oil/Coal/Gas to generate power; when you artificially allow the USD to go as high as Rs. 170 then this will happen because every import gets lots more expensive. And on top of that all, there are compound effects such as Transportation of the same Oil also becomes more expensive and so on.

But, if nonsense is to be believed, USD at 170 is good for Pakistan and is bad at 104!! Fortunately (or NOT), we have many who believe that BS!
Some people also believe that electricity produced by FO at Rs18/unit is good but electricity produced by LNG at Rs13/unit.


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Zibago

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This was bound to happen because we mostly use imported Oil/Coal/Gas to generate power; when you artificially allow the USD to go as high as Rs. 170 then this will happen because every import gets lots more expensive. And on top of that all, there are compound effects such as Transportation of the same Oil also becomes more expensive and so on.

But, if nonsense is to be believed, USD at 170 is good for Pakistan and is bad at 104!! Fortunately (or NOT), we have many who believe that BS!
You could run high deficits to subsidize consumption but would it be a wise thing to do? Just look at what happened to Lebanon and Turkey who went on a similar path
Dollar has to be reflective of market realities otherwise you just make people happy for few months and end up in a bigger crisis later on
 

Mav3rick

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You could run high deficits to subsidize consumption but would it be a wise thing to do? Just look at what happened to Lebanon and Turkey who went on a similar path
Dollar has to be reflective of market realities otherwise you just make people happy for few months and end up in a bigger crisis later on
The problem in our market is lack of investment opportunities and so many in our society opt to hoard USD in anticipation of hefty returns when USD goes down. The hoarding is a big problem and so are some big players who are able to manipulate the very small USD market in Pakistan. You are giving examples of Lebanon and Turkey, 2 countries of which I have no idea; however, you also have the example of Pakistan under Dar which was able to do all that and more.

What is the point of high reserves and decrease in CAD (as per PTI narrative) if the lives of people continue to be miserable and inflation (real inflation) going through the roof? Unless, the idea of PTI is to choke the economy and the masses for 4 years and then relax everything giving an impression that the economy is indeed excellent in the final/election year.
 

Zibago

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The problem in our market is lack of investment opportunities and so many in our society opt to hoard USD in anticipation of hefty returns when USD goes down. The hoarding is a big problem and so are some big players who are able to manipulate the very small USD market in Pakistan. You are giving examples of Lebanon and Turkey, 2 countries of which I have no idea; however, you also have the example of Pakistan under Dar which was able to do all that and more.
So you will create opportunities by taking on debt and spending them on short term subsidized consumption?
What is the point of high reserves and decrease in CAD
Ap adhi roti khao ya ap ko ghar sey bhi hath dhoney parein kuch mahino baad kia behtar hy?
Unless, the idea of PTI is to choke the economy
Record exports arent exactly signs of a chocked economy
You are giving examples of Lebanon and Turkey
They are two examples of countries that put Darnomics on steroids and came out battered



Cheap consumption backed by debt feels good for a short while but is horrible in the long run and causes more pain
 

Mav3rick

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So you will create opportunities by taking on debt and spending them on short term subsidized consumption?
On the contrary, with a stable USD/PKR, I will take away the short and medium term hoarding of USD thereby nullifying the need to keep stabilizing the USD, amongst other measures.



Ap adhi roti khao ya ap ko ghar sey bhi hath dhoney parein kuch mahino baad kia behtar hy?
Ofcourse, the later. However, the example more likely here is to "Keep paying more on everything I purchase just in the hope that I will stop buying"



Record exports arent exactly signs of a chocked economy
Record exports? Let's be serious, how much have the exports really picked up and increased when compared to exports in the last 10 years? And you consider export of wheat, sugar and other edible items to be a plus when we were forced to import the very same things later on? It's like exporting all surplus items just to show an increase in export figures and then import all the things back when required, I call that very very stupid.

And, when we speak of exports, which will rise on account of surplus, uninterrupted power supply thanks to the dozens of Power Projects which were started by the previous Government, shouldn't we appreciate that investment? Exports were not increasing because a lot of our export based industry shifted out of the country in between years 2010 and 2016/17 on account of rising electricity shortfall. The industry will continue to grow now that we have surplus energy; the only caveat is that now we are producing energy at PKR 170/USD instead of the more reasonable Rs. 120-125/USD.



They are two examples of countries that put Darnomics on steroids and came out battered



Cheap consumption backed by debt feels good for a short while but is horrible in the long run and causes more pain
I read the first link and found nothing adverse to burning through reserves to stabilize the economy. Could not read the 2nd link because I refuse to turn-off my add-blocker and the site insists on it before allowing me.

Anyway, I have found no evidence that short term support for the local currency, as was done by Dar on occasions, lead to any complications especially when one has plans on increasing the exports, FDI and remittances.

Ideally, one would make all purchases against cold, hard cash, however, in reality this is not always possible. Consider the example of Bhasha & Mohmand Dams, is it possible for a growing economy to be able to fund these mega projects? It is not! and hence debt against this asset, even though very large in nature, still makes sense in the long run. Similarly, one must see everything in the long run as we all have expected our exports and FDI to increase with availability of surplus energy and other incentives which would offset any short term currency stability measures by the Government.

However, the current Government has failed on all accounts because they simply have no idea how to handle matters; and I am not saying this.....it is the Government which is saying it by its actions of playing musical chairs with the Finance Ministry, Energy Ministry and FBR etc.
 

Genghis khan1

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Whole idea to use imported oil, gas and coal for power generation was idiotic move to began with. They could have used 40% tariff hike
15 years ago to fund construction of Dams. But No, it takes courage and political capital to make decisions that are good for country and long term.

Now pay 40% extra to Foreign countries and their banks.
 

Zibago

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On the contrary, with a stable USD/PKR, I will take away the short and medium term hoarding of USD thereby nullifying the need to keep stabilizing the USD, amongst other measures.
Again wasting reserves on subsidizing USD only helps with consumption
Dollar should be free floating with minimum government intervention and its value should be determined by market forces instead of political forces
Ofcourse, the later. However, the example more likely here is to "Keep paying more on everything I purchase just in the hope that I will stop buying"
Again you want the government to subsidize consumption instead of making production more competitive
Record exports? Let's be serious, how much have the exports really picked up and increased when compared to exports in the last 10 years?
A lot actually compared to the last government era where subsidizing consumption for political gains was priority
And you consider export of wheat, sugar and other edible items to be a plus when we were forced to import the very same things later on?
The biggest gain in our exports was from textile sector which was heavily neglected by PPP and PMLN so again you are wrong
I read the first link and found nothing adverse to burning through reserves to stabilize the economy. Could not read the 2nd link because I refuse to turn-off my add-blocker and the site insists on it before allowing me.
He didnt stabilize the economy he ruined it
He had to reverse his policies because of the disaster he landed his country into

https://www.thenationalnews.com/opi...-divine-test-it-is-a-policy-failure-1.1192620


Anyway, I have found no evidence that short term support for the local currency, as was done by Dar on occasions, lead to any complications especially when one has plans on increasing the exports, FDI and remittances.
During Dar era our exports actually declined
Imagine being so incompetent that even PPP figures top your figures
Similarly, one must see everything in the long run
That is exactly why subsidizing consumption for short term gains is a horrible idea which our citizens think is actually good
 

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