ISLAMABAD: The power sector’s circular debt may reach Rs2,805 billion by end of June. The government owes independent power producers (IPPs) Rs1,711 billion. 

Government-owned thermal power plants owe PSO Rs98bn, whereas government owes Power Holding Company Rs996bn.

There is a Rs27 billion increase in circular debt due to power theft, due to which K-Electric has to pay an additional Rs62bn. 

Earlier in May, Minister for Planning, Development and Special Initiatives Asad Umar said the circular debt build-up in the energy sector had declined by Rs 189 billion during the first 10 months (July-April) of the current fiscal year as compared to the same period of last year.

“Circular debt build-up in Jul-Apr this fiscal year is Rs 260 billion compared to Rs 449 billion same periods last year-a reduction of Rs 189 billion”, he said in his tweet.

He added that the full-year circular debt builds up this year was expected to be more than Rs 100 billion less than the circular debt build-up in the last year of the PML-N government.

“This huge improvement in the circular debt build as compared to last year of PML-N government has been achieved despite the massive increase in capacity payments caused by decisions committed by the PML-N government.”

Asad Umar said Prime Minister Imran Khan government was improving performance and clearing mess inherited from PML-N in every sector.

“This improvement in energy sector performance and slow down in build-up of circular debt has been the result of sustained hard work, analytical data-based decision making and willingness to break the nexus between decision-makers and powerful elite,” he added.

The FPCCI had earlier demanded that the Federal Government should explain the rationale behind approving the installation of a new 1263MW power plant being set up by Punjab Thermal Power Ltd in Jhang; which is based on imported RNLG. This new plant will cost 6 cents/Kwh when producing electricity on imported RLNG and as high as 11 cents/Kwh, when producing on HSD. On the other hand, the government is not allowing the setting up of environment-friendly renewable energy power plants based on Wind and Solar; which will cost merely 3.5 cents/Kwh. 

This step will further add to the already unmanageable circular debt; increase import bill; and will result in the production of expensive energy – and, the resultant increase in the cost of doing business. It is pertinent to note that wind and solar plants require no imported fuel and cause no burden on import bill or exchange rate, said the FPCCI. 


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