The fact that circular debt has mounted to Rs 321 billion in just three years has made senators angry during the meeting of Senate Standing Committee on Finance. This revelation left the senators confused; how come has the circular debt increased to Rs 321 billion when oil prices remained low, electricity consumers paid hefty bills of electricity, there were no subsidies by the government on electricity, and after assuming power the incumbent government had paid Rs 480 billion to IPPs “without pre audit” to clear the circular debt in June 2013. The senators termed payment of Rs 480 billion to IPPs, “in haste”, and a “World Record”, for paying such a mega amount in one day, as illegal, as there was no pre audit. 

The questions raised by Senators in the meeting were being raised in media since many days after the Government-IPPs tussle regarding IPPs claims of circular debt and denial of performance audit. IPPs forum had claimed that circular debt of the power sector was Rs 665 billion, which was denied later by the Ministry of Water and Power, saying that circular debt figure quoted by IPPs is wrong and the actual circular debt is Rs 329 billion (In Finance Committee, the Circular debt figure was Rs 321 billion, a difference of Rs 8 billion.) IPPs, including the inefficient ones, were paid more than 100%. The question is, which law allows the government to pay more than 100% to those IPPs whose performance was lower than in agreement? How come low performing IPPs got more than 100% payments by the government instead of a fine for low performance? 

The answer is, because Rs 480 billion were paid to IPPs without pre audit. So, why did the government by-pass the audit process in payments of circular debt to IPPs? If there would have been audit of IPPs bills, No 100% payments were possible to inefficient IPPs. Audit would have lowered the Rs 480 billion figure as the government would have fined the inefficient IPPs, instead of paying them “more than 100%”. But, mysteriously, in June 2013, the government deliberately avoided pre-audit of IPPs claims and made payments of Rs 480 billion, but the post-audit of Rs 480 billion had exposed all these irregularities. The post audit had also revealed that the government had not recovered a fine from the account of IPPs, instead paid a fine to IPPs. It also exposed that many bills of IPPs were “photocopies, and not original ones, but the “Generous Government”, did not bother to check these bills, and made payments to IPPs from the taxpayers’ money. And now the IPPs claim that the circular debt is Rs 665 billion and deny performance audits as well. What sort of agreement government had made with these IPPs, in which tax payers always end up suffering. Now, we must arrange Rs 321 billion to while the inefficient ones get more than 100%. 


Islamabad, September 2.