ISLAMABAD: The monthly accumulation into a monster of circular debt stood at Rs35 billion as it went up to Rs139 billion during the first four months (July-October) period of the current fiscal year 2021-22.
The overall stocks of the circular debt (CD) touched heights and climbed to Rs 2,419 billion on account of flows and stocks till the end of October 2021. These figures brought to fore during the Cabinet Committee on Energy (CCOE) held under the Chairmanship of Federal Minister for Planning Asad Umar here on Thursday.
Top official circles projected that the capacity payment is all set to touch new heights in the next fiscal year 2022-23 whereby it may balloon to go beyond Rs one trillion mark. In the wake of arising difficulties the monster of circular debt is going to stay here during the remaining tenure of PTI led regime as the dream of erasing the circular debt on monthly basis could not be achieved as realistically analyzing the ground realities.
The accumulation of circular debt went up by Rs 450 billion during the tenure of PML (N) in 2017-18. However, it continued mounting up as it rose by Rs 538 billion in FY 2020 and Rs 130 billion in FY2021. Under the Circular Debt Management Plan (CDMP) envisaged under the IMF’s conditions, the government had made plans to bring down the circular debt to zero on monthly basis before the Covid-19 pandemic. However, there was consensus within the government that the flow of circular debt could not be brought down at zero, but for all practical purposes, it could be curtailed by less than Rs 10 billion per month. For bringing it at zero, the government would have to hike the electricity tariff manifold which seemed impossible at the twilight of the PTI-led regime.
According to the datasheet of circular debt, total payable to power producers stood at Rs 1,420 billion, GENCOs payables to fuel suppliers Rs 91 billion, and amount parked to Power Holding Company Rs 908 billion, totaling the outstanding amount of CD touching Rs 2,419 billion. The unbudgeted subsidy for AJK and KE increased the CD to the tune of Rs 75 billion. There are Rs 292 billion as receivables from the KE as of June 2021 pending due to a subsidy dispute between KE and the Government of Pakistan. The Power Holding Company and IPPs stocks also projected adjustments/payments through the federal budget as repayment of Rs 130 billion PHL debt and the settlement of outstanding arrears of Rs 427 billion to IPPs in FY 2022.
According to an official announcement made here, a meeting of the Cabinet Committee on Energy (CCOE) was held under the Chairmanship of Federal Minister for Planning, Development, and Special Initiatives Asad Umar here on Thursday. The Petroleum Division presented the projected natural gas supply in the country for the winter. During the Meeting Petroleum Division presented different policy options for management of the gas supply side during winter 2021-22. The meeting was informed about the efforts to enhance the natural gas supply during the meeting. The CCoE directed the Petroleum Division to ensure maximum supply while ensuring implementation of a demand management plan as already approved by the Cabinet.
The Committee also considered the summary presented by the Power Division on the Implementation of CCoE decisions. It was informed in the meeting that all new RE projects will participate in the open competitive bidding process to ensure the least cost procurement of renewable electricity. The CCoE approved the summary and recommended expediting the bidding process at the meeting. The Chair further directed the Power Division to inform the CCoE in the next meeting of a detailed roadmap with millstones for the establishment of RE projects, including the potential locations and details of the competitive process be presented.
The CCoE also reviewed the Circular Debt Report October 2021 submitted by the Power Division. The Committee appreciated the sustained reduction in the accumulation of Circular Debt. It was informed in the meeting that the performance of the DISCOs is continually improving. The sector is also adjusting to the Post-Covid scenario where a collection of dues had dropped significantly. The government has been releasing the budget subsidy amount as per the plan in order to ensure the sustainability of the sector.
The meeting was attended by Minister for Finance, Minister for Energy, Minister for Maritime Affairs, Advisor to PM on Commerce & Industries, chairman OGRA, Chairman NEPRA, representatives of regulatory authorities and senior officials of Ministries/Divisions also participated in the meeting.