LAHORE - The power sector’s dues against the National Transmission and Distribution Company have galloped to Rs155.7 billion as planners were slow in fixing the power theft and increase the collection of bills, sources said. The government cleared circular debt of power sector up till May 31, 2013 recently.

Government increased the power tariff for commercial industrial users whereas domestic tariff will be increased from October 1. Official sources said that rationalisation of tariff has brought some relief for the government but the challenge remains how to stop the theft and non recovery of the bills which will cause the circular debt to rise again.

Power companies officials said that the clearance of circular debt by this government was a very bold and right step but wrongly projected as resolution to power crisis, it was only an attempt to keep the power sector afloat whereas the real challenge lies in recovery of bills, tariff rationalisation for both domestic and commercial consumers and stopping the theft and reducing the line losses through upgradation of transmission and distribution system. As per latest figure, NTDC has to pay Rs 54 billion to such IPPs which have to procure the fuel from their own sources and most of them have to pay the long term debt installment by September 30, 2013. Rest of Rs102 billion are payable within government entities and non payment to those will not affect the generation of the electricity. Government should increase the payment of subsidy to meet the payment of outstanding amounting to Rs54 billion by September 30, 2013 so that chance of decrease in generation may be eliminated.

Power Ministry sources said that under new arrangement NTDC has to pay after 30 days of power supply to IPPs operating under 2002 power policy. The IPPs say that an MoU was signed in this regard and the government of Pakistan has written to NEPRA in this regard. The IPPs had also submitted their proposal to NEPRA for approval of the additional cost of working capital. They pointed out that the government would save interest cost (from KIBOR+4.5% to KIBOR+ 2%) if NEPRA approves the additional cost of working capital. It is important to note that with annual power consumption hovering around 70 billion units, delay in power tariff raise causes additional burden of around Rs 25-30bn per month on govt.

 and will keep power supply from IPPs at the lower end resulting in electricity outages.