new wonders: Power sector receivables surge to Rs577bn

[ziaulislam]

Power sector receivables surge to Rs577bn
Ahmad Fraz Khan
Updated about 10 hours ago

— Reuters/File
LAHORE: The power sector total receivables have risen to Rs577.330 billion in the first quarter (July-September) of this fiscal year, as recoveries dropped to 80 per cent, the sector recovering only Rs265bn against billing of Rs329bn.

The sector started the year with a carry-over default of Rs512bn, but has added Rs65bn to the tally in the next three months, at a rate of under Rs21.66bn a month, or Rs722 million a day.

“This is despite the official attention being riveted to recovery, and the ministry, along with all distribution companies, running a high profile recovery campaign,” regrets a former head of Pakistan Electric Power Company (Pepco).

By the end of June last year, the recoveries were at 89.70pc, which dropped by 10pc in the next three months. This failure to recover the bills lies at the heart of current crisis in the power sector, he claimed.

According to the latest data compiled by Pepco, the sector billed Rs101bn in July, but recovered only Rs79.80bn. In August, its billing touched a new peak of Rs115.70bn (many believe because of massive over-billing but the ministry insists it happened due to addition supply of electricity) and it received only Rs93.80bn.

In September, the billing came down to Rs122.60bn and so does the recoveries; at Rs91.40bn. Thus, in three months, the total billing stood at Rs329.30bn, with recoveries falling to Rs265bn, leaving a gap of Rs64.30bn.

Out of Rs65bn added to the receivables, Rs40bn default has come from the private sector. Its dues (commonly known as private default) have swelled from Rs355bn by the end of June to Rs395bn by the end of September.

“The governments of Sindh (Rs61bn) and Azad Jammu and Kashmir (Rs42bn) and the K-Electric (Rs37bn) put together owe over Rs140bn,” says a former general manager (finance) of Wapda.

If the federal government cannot control these entities, what could one expect from the private sector? The provincial governments (excluding AJK) now owe Rs93bn, up from Rs84bn in June this year, but the federal government cannot do anything about them. “It seems to be a classic case of blind leading the blind; no one knows where is he heading for?

“The political leadership, devoid of a proper strategy, keeps pushing for recoveries and failing consistently. The sector managers, with overwhelming majority working on ad hoc basis, are just trying to keep their books balanced. In the process, the sector is sinking”, he said.

The PML-N government cleared around Rs500bn circular debt when it took over and hoped to ease load shedding. Now it owes over Rs350 billion in circular debt, and the amount of receivables is over and above that figure.

“The sector owes Rs350 billion, which is ballooning due to interest payments as well, and it has to receive Rs577 billion, which it cannot recover. For how long can the government fill in to create the balance, one can only wait the see,” he concluded.

Published in Dawn, November 19th , 2014

Power sector receivables surge to Rs577bn - Newspaper - DAWN.COM

 

[ziaulislam]

i wonder whether our finance minister has the guts to say he ended circular debt..
i was saying the same thing back than, that simple book keeping methods of redistributing loans to PSO, banks and central govt wouldnt solve the problem.
the govt instead went from bad to worse and evident by increasing theft and line losses each successive year

 

[VCheng]

The power sector total receivables have risen to Rs577.330 billion in the first quarter (July-September) of this fiscal year, as recoveries dropped to 80 per cent, the sector recovering only Rs265bn against billing of Rs329bn.

So, @Donatello this problem can be solved in one month? How?

 

[Donatello]

So, @Donatello this problem can be solved in one month? How?

Implementing deregulation of power companies or else they get transferred to private ownership, like K-Electric.
The one month time frame i mentioned was for the passing or enacting of various acts this would make possible...........of course the actual time it would take to make a practical impact would be longer. But yes, Bureaucratic hurdle can be cleared in one month, if determined.

 

[VCheng]

Implementing deregulation of power companies or else they get transferred to private ownership, like K-Electric.
The one month time frame i mentioned was for the passing or enacting of various acts this would make possible...........of course the actual time it would take to make a practical impact would be longer. But yes, Bureaucratic hurdle can be cleared in one month, if determined.

Even with that framework, how would the power companies reduce theft and get payment in time from the rest, including the government and the military?

 

[Donatello]

Even with that framework, how would the power companies reduce theft and get payment in time from the rest, including the government and the military?

It's simple. Pass and enact laws. No payment within a stipulated time, no electricity. That's how it works in Karachi. We have 24/7 power and K-Electric generally ends up in profit.....and with a decent power generation capacity of it's own.

 

[VCheng]

It's simple. Pass and enact laws. No payment within a stipulated time, no electricity. That's how it works in Karachi. We have 24/7 power and K-Electric generally ends up in profit.....and with a decent power generation capacity of it's own.

Of course it is simple in concept, but try doing it just about anywhere outside of Karachi.

 

[Archie]

I think Power Sector should be privatised

That will ensure the tax payer is not burdened with the bill to bailout these companies

 

[ziaulislam]

most of receivable are from private sector not govt sector.
govt sector receivable are easy, they should be directly deducted from the budget. or the provincial shares.

govt agencies donot want to pay to make their files look better. by direct deduction they will not be able to do so.

privatization or smart meters is the solution. when govt came it paid off billions instead of solving the core problem. so basically it wasted two years. the very reason why their is poor response in power sector investment as companies dont expect a return due to such poor supply and receivable problem.
govt just painted the system instead of correcting it, infact it has became worse.

true failure of PML N govt.
even thought the CNG/LPG prices have halved govt is still unable to solve power problem, truly EPIC failure

 

[FaujHistorian]

Of course it is simple in concept, but try doing it just about anywhere outside of Karachi.

What's good for goose is good for gander.

or if you prefer

What’s sauce for the goose is sauce for the gander

 

[ziaulislam]

the bigger issue is not the line losses(power theft) govt makes up for that by selling way expensive power at rate of 14rs ( even furnace oil not LPG produces power at around 14 these days forget the fact that 1/3rd of power generated in 2012 was from hydro ,i.e 34 billion units out of 98 billion in whole year at rate of 2rs)

the bigger issue govt not able to get the receivable from large and small industries that belong to politicans as well as large business

 

[VCheng]

the bigger issue is not the line losses(power theft) govt makes up for that by selling way expensive power at rate of 14rs ( even furnace oil not LPG produces power at around 14 these days forget the fact that 1/3rd of power generated in 2012 was from hydro ,i.e 34 billion units out of 98 billion in whole year at rate of 2rs)

the bigger issue govt not able to get the receivable from large and small industries that belong to politicans as well as large business

I think the correct word to describe the true situation in the power sector is "clusterfvck". Everybody is trying to screw everybody else. May be it is applicable to more than just the power sector?

 

[ziaulislam]

but somehow PMLN things that using cheap dirty coal and already existing hydro power, and then selling it three times the price will solve the problem

 

[SBD-3]

Even with that framework, how would the power companies reduce theft and get payment in time from the rest, including the government and the military?

Exactly! people here easily overlook is that the biggest reason for buildup of circular debt is theft and non-payment. As long as suppliers of input and power producers don't get paid, they will not increase or even maintain supply. And this is where the issue is politicized by three provinces since they don't pay their bills.

 

[SBD-3]

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