ISLAMABAD - A parliamentary committee was yesterday informed circular debt has shown an increase of Rs40 billion during the first three weeks of the interim government.

The committee was also told that the power tariff in the country is the highest in the region and Pakistanis are paying almost double price per unit than Indians. On May 31, the last day of the previous government, the circular debt was Rs 507 billion, which increased to Rs 547 billion in June, Hubco CEO Khalid Mansoor said, while briefing the Senate Special Committee on Circular Debt .

The meeting of the Senate Special Committee on Circular Debt , held here with Senator Shibli Faraz in the chair, discussed the issues of the circular debt , electricity theft and loadshedding. Khalid Mansoor said the previous government had paid Rs 200 billion and after that no payment was made.

Hubco Chief Khalid Mansoor said that due to delay in payments to the bank, they are paying extra markup while the government is not ready to pay it. Chinese investors also have reservations over late payment interest (LPI) and may withdraw their investment, he said. “We have requested the finance minister to resolve the issue,” he said and added Shanghai Electric Limited, one of the investors in a Hubco project, was quite skeptical and could walk away from K-Electric deal over delays.

More than 30 percent electricity is being generated from furnace oil and this is the reason that power tariff in the country is highest in the region, he said. Pakistan has the highest electricity tariff as compared to other countries with Rs 12.5 per unit as compared to Rs 10 in Vietnam, Rs 9.2 per unit in Bangladesh and Rs 7 in India. On the other hand, despite having the highest bill recovery rate among all other sectors, industries in Pakistan faced higher electricity tariff at about Rs 14 per unit, he added. The Hubco chief said that due to transmission losses they have to bear Rs 130 billion annual losses.

He said as Gencos don’t have funds, they are generating less electricity. He said out of 25,000MW half is being generated by the private sector. The Hubco CEO further said America has changed its policy regarding coal power projects and China is the only country which is providing help for the coal projects.

Officials of the power division said Nepra has cancelled licences of Faisalabad, Multan and Shahdara power plants. The power division officials suggested re-engineering of machinery should be banned and Gencos handed over to the private sector. The committee was informed only 4,000MW was added to the system from 2004 to 2013, which resulted in the electricity crisis. The electricity shortage has a negative impact on the GDP, he affirmed.

Saif Power CEO Sohail Haideri said that in the past gas supply to the private power plants had been changed. “Since diesel was expensive, we had to close our plants. During seven years our dispatch was only 40 percent,” he said.

Shibli Faraz said there is presence of oil mafia and the country is being put on a ventilator. He said the power sector debt is more than Rs 1,000 billion and if the practice was not changed, the country would face a big crisis.  The Pepco CEO said improvement in governance system is required to end the circular debt . The CEOs of some Discos were changed six or seven times within the span of five years, he said and questioned how things could get better in such a situation. There are two main reasons for the circular debt , performance of Discos and the government administrative structure, he pointed out.

Kot Addu Power Company Limited CEO Aftab Butt said, instead of providing subsidy to the lifeline consumers, the government should provide them with electricity from alternative sources.

Senator Jamal Deeni said the demand for electricity remains constant during the entire year. He said Balochistan is getting the least electricity, which has destroyed industries in the province.