The circular debt in the power sector of Pakistan witnessed a significant increase, reaching Rs 2.65 trillion by the end of May, marking a jump of Rs 393 billion or 18 percent in just 11 months.
This surge stands in stark contrast to the figures of the previous fiscal year, FY22, when the debt actually decreased by Rs 27 billion from Rs 2.28 trillion to Rs 2.25 trillion, as per data from the Power Division of the energy ministry.
According to available information, the total payable amount to the power sector was Rs 1.35 trillion, with Rs 101 billion owed to generation companies (Gencos) and Rs 800 billion as debt to Pakistan Holding Limited (PHL) during the fiscal year 2021-22.
However, in fiscal year 2023, there was a significant increase in the amount payable to power producers, soaring to Rs1.77 trillion, while payables to Gencos rose to Rs110 billion. On the other hand, the PHL debt decreased to Rs765 billion.
In FY22, the budgeted subsidies that were yet to be released were reduced by Rs12 billion, but during the first 11 months (July to May) of 2022-23, they increased to Rs72 billion. Furthermore, the unbudgeted or unclaimed subsidies decreased by Rs133 billion in FY22 but rose by Rs34 billion in the period from July to May.
The interest charges on delayed payments by independent power producers (IPPs) increased to Rs105 billion in 2021-22 but decreased to Rs87 billion by the end of May. The markup paid by PHL on the IPPs’ claims also saw a surge from Rs29 billion in 2021-22 to Rs58 billion.
However, the pending generation cost, including quarterly tariff adjustments (QTA) and fuel charge adjustments (FCA), decreased from Rs414 billion to Rs171 billion in the 11-month period.
The dues owed by K-Electric decreased from Rs107 billion to Rs57 billion, and the losses incurred by power distribution companies (Discos) due to inefficiency decreased from Rs133 billion to Rs125 billion.