LAHORE, Dec 11: The unpaid bills of power companies have again piled up to a precarious level of Rs216 billion in less than six months after the Nawaz Sharif government had settled the previous ‘overdue’ bills of both the public and private electricity producers and their fuel suppliers for the pre-March 2013 period.
While clearing chunk of the unpaid bills of the power companies at the end of June and the remaining in early July, Finance Minister Ishaq Dar had vowed never to let what is commonly known as circular debt to rise again. The unprecedented step that pushed the budget deficit to 8.2pc of GDP last fiscal, he had claimed, would ease power shortages.
The government has continuously brandished what it calls as its first major policy achievement without acknowledging the resurgence of the debt during the early months of its own tenure.
In all the government had cleared the unpaid bills of the public and private power companies and their fuel suppliers to the tune of Rs480bn through cash payment of over Rs322bn just before the close of the last fiscal, and non-cash settlement of above Rs138bn in the first few weeks of the current financial year.
According to independent power producers (IPPs) sources, the government had initially continued to make partial payments to them against their bills for the post-March period. “Even these partial payments have been stopped for some time now,” a frustrated executive of an IPP said. “The payment of previous bills accumulated under the previous set-up was the right steps in the right direction but it was wrong to assume that it would resolve all the chronic power troubles for ever.”He said the IPPs could invoke sovereign guarantees if the government did not take steps to pay their bills over the next few weeks if not days. “The last time the IPPs had invoked sovereign guarantees to pay off their creditors and suppliers, the size of their unpaid bills was far smaller than its current level,” he warned.
The IPPs blame the government’s failure to cut the transmission and distribution inefficiencies and losses and theft amounting to one-third of the country’s total power productions, delayed increase in the electricity price, poor recovery of the unpaid bills of more than Rs500bn from defaulting consumers, etc. for the rapid growth in their unpaid bills.
Another IPP executive said the government was holding up ‘overdue payments’ to the power companies to meet the revenue targets given by the International Monetary Fund (IMF).
“Unless the government realises the gravity of the situation for future supply of electricity and starts clearing the bills, it is going to become a major problem for it going forward,” he said.
According to the details of the unpaid bills of the power companies accumulated since April provided by the IPPs, the government owes Rs56.73bn to Gencos (public sector power generation firms), Rs3.77bn to Chashma Power; Rs3.48bn to hydel plants, Rs44.45bn to the IPPS (set up under the 2002 power policy), and Rs108.10bn to the IPPs (established under the 1994 policy).
The chief executive of a major private power company insisted the government must immediately get out of the power business by selling the public sector generation and distribution companies if it wanted to fix the collapsing power sector. “You cannot hope to bring about improvements in the power sector or attract investment in new generation capacity unless the market forces are allowed to play their role.”