Wednesday, 07 September 2011 10:45
ISLAMABAD: The ministry of finance is reported to have released about Rs30 billion to the power sector and oil suppliers in the last week of August to temporarily ease supply constraints, pending a workable plan to solve the ever increasing circular debt problem expected to be approved by the federal cabinet.
Informed sources told Dawn on Tuesday that a meeting of the cabinet had been delayed for a week because of the prime minister s visit to Kazakhstan. According to them, the Pakistan State Oil (PSO) which was facing severe financial constraints was paid Rs15 billion through the state-run power companies and two independent power producers (IPPS) just before Eid and an equivalent amount was disbursed to IPPs to keep their plants running.
A PSO official confirmed having received Rs15 billion one day before Eid, but said it did not ease its financial constraints.
We supply about Rs32 billion worth of fuel a month and need to be paid previous accumulations because we have already incurred the cost in making the product available.
He said the PSO had requested all ministries concerned to release more money and ensure recovery of dues from the power sector to be able to retire letters of credit becoming due on September 12 and the week ahead. The payables due to Kuwait Petroleum Company on Sept 12 are estimated at about Rs40 billion, as total payables to fuel suppliers stand at about Rs100. 3 billion. This is in addition to Rs59 billion payable to local refineries — Rs25 billion to Parco, Rs13 billion to Attock Refinery, Rs9. 5 billion to National Refinery, Rs7. 7 billion to Pakistan Refinery and Rs3. 8 billion to Bosicor.
On the other hand, PSO s total receivables had accumulated to over Rs149 billion on September 6, of which about Rs114 billion had become overdue — meaning that these amounts have long been defaulted beyond three months grace period.
With the last week s disbursements, PSO receivables from Wapda were reduced to Rs30. 2 billion while Hubco and Kapco have to clear about Rs63 billion and Rs32 billion, respectively, to the PSO. The KESC has to pay over Rs5. 5 billion.
Informed sources said the special committee constituted by the prime minister for resolving the circular debt issue had prepared a plan that envisaged about 16 per cent increase in power tariff and parking of power sector s overdue receivables into the power holding company to be financed through loans from Asian Development Bank and domestic commercial banks.
The public debt so created would be serviced through budgetary allocations, the sources said.
At the same time, the federal government has asked provincial governments to clear their electricity dues. The major cause of concern, however, still is over 20 per cent system losses in the power sector owing to inefficient generation companies, leakage in the transmission system and poor recovery of bills by distribution companies.
To partially offset the losses owing to inefficiencies, the government is separately putting in place a new policy to hand over generation companies to the private sector through 10-year management contracts.
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