Home Global The circular debt of Pakistan’s power sector decreases by Rs336 billion

The circular debt of Pakistan’s power sector decreases by Rs336 billion

by Adeel Ikram

The circular debt of Pakistan’s power sector decreased by Rs336 billion

ISLAMABAD — Circular debt in Pakistan’s power sector has decreased by 336 billion as part of efforts by government officials to reduce late payment patterns.

The circular debt of Pakistan's power sector decreases by Rs336 billion

Debt owed by various power-related entities has increased significantly over time, while charges and subsidies may have fluctuated with time but have recently seen decreases. Unpaid bills in the power industry often begin at the generation stage before continuing through distribution channels before recovery, and electricity theft takes over later steps in this cycle.

Information provided by the Ministry of Energy’s Power Division indicates circular debt has decreased by 336 billion to Rs2.3 trillion at the end of June this year compared to an increase of around 15 billion seen just a month prior.

Fiscal 2023 saw circular debt grow by an increase of Rs57 billion versus its decrease of Rs27 billion during last year’s fiscal year.

Reported findings included an increase of Rs1.4 trillion due to power producers in 2013, totaling $73 billion payable. At the same time, Power Generation Companies (GENCOs) credit to fuel providers rose significantly – by over Rs10 billion alone!

Data released this past June shows that Power Generation Companies owed fuel suppliers Rs111 billion during FY23; by contrast, PHL saw its balance drop from Rs800 billion last year to just under Rs765 billion as of June.

According to this document, it has also been stated that the government added 100 billion rupees of circular debt due to interest charges imposed upon independent power producers due to late payments; additionally, generation costs increased by an additional Rs250 billion during FY23.

Notably, a rise of Rs396 billion caused by ineffective power distribution companies and under-recovery of bills was offset by an equally impressive reduction of Other Adjustments totaling Rs447 billion.

Further, fiscal space witnessed a reduction of Rs162 billion.

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