June 2, 2003	Monday	Rabi-us-Sani 1, 1424

Please Visit our Sponsor (Ads open in separate window).

ISLAMABAD, June 1: Five of the country’s major public sector corporations are estimated to pay Rs60 billion during the fiscal 2003-04 to service their public and private sector debts and are expected to face a cumulative financing gaps amounting to Rs30 billion.

The government submitted these estimates to the International Monetary Fund and the World Bank by the federal government a few days ago under financial improvement plans (FIPs) of five corporations namely, Wapda, KESC, Pakistan Steel Mills, Pakistan Railways and Pakistan International Airlines.

Documents suggest that the line losses of both the power utilities — Wapda and KESC — have increased by two per cent and 7.1 per cent, respectively, during first three quarters of the current fiscal.

Wapda’s losses amounted to 27.4 per cent against a target of 25 per cent. Similarly, Kesc’s losses increased by 3.4 per cent to 41.2 percent during the third quarter by comparison with losses sustained in the second quarter.

The government is required to submit to IMF the quarterly performance reports of these five corporations, which have been a constant drain on the national exchequer for a number of years.

Under the FIPs, Wapda has been given a target to service Rs33.4 billion debt during the next fiscal year (2003-04). This would include Rs20.9 billion debt repayment to the federal government and Rs11.35 billion to other institutions.

Wapda would face a total financing gap of Rs18.197 billion during the next year. The government had earlier projected about 12.8 per cent increase in Wapda tariff but has revised its commitment to raise consumer tariff by 6.6 per cent during the year 2003-04 to meet the financing gap.

Wapda’s total losses are estimated to decline to 23.5 per cent in the next year while its debt coverage ratio for 2003-04 has been estimated at 0.9 per cent against a targeted 1.2 per cent. Its next year total receivables are projected to be around 19 per cent of the total billing against earlier targets of 16 percent.

Total public sector receivables are not estimated at 35 per cent of billing against earlier projections of 16 per cent. The higher rate of receivable has been made in view of the rising FATA arrears.

Similarly, the Karachi Electric Supply Corporation is projected to pay Rs2.148 billion next year to cover its debt servicing commitments, including a principal repayment amounting to Rs1.525 billion and Rs623 million financial charges.

The KESC is estimated to face a net shortfall of Rs4.239 billion during the next fiscal year. The shortfall would be met through Rs3.7 bank loans, guaranteed by the federal government, and Rs533 million through federal budget funding.

Pakistan Steel Mills would pay a Rs2 billion amount to service its debt during the next year, including Rs973 million financial charges and slightly over Rs1 billion as repayment of loans. The PSM is the only public sector corporation that is expected to have Rs1.354 billion cash surplus by the end of the next fiscal year.

The Pakistan Railways is projected to pay about Rs3 billion in 2003-04 on account of debt servicing, including Rs1.75 billion as interest on foreign loans and Rs1.4 billion as interest on overdraft. It is estimated to face a cash deficit of Rs6.764 billion during fiscal 2003-04.

PIA is estimated to repay on an average Rs4 billion after every quarter while its total shortfall is projected to be around Rs3 billion next year.

The Wapda FIP revealed that cash flow statement reflected a decrease both in cash collection and payments during the third quarter of fiscal 2002-03. The net shortfall, however, has improved by Rs7.322 billion against targets set for the period.

The decrease in cash collection is due to increase in transmission and distribution losses by two per cent, as actual losses were 27.4 per cent and secondly because of increase in receivables by seven per cent over the targets for the quarter.

The decrease in cash outflow during the third quarter of the current fiscal is due to non-servicing of the government debt, non-payment of the net hydel profit to the provinces and decrease in payments to the fuel and power suppliers.

The net after-tax loss of Kesc increased by Rs1.57 billion over the target figures mainly due to increase in the T&D losses.

Cash flow statement reflects a shortfall of receipts, increase in payments and net shortfall of Rs4.955 billion during the third quarter. The overall shortfall of financing before bank loan during July-March was Rs2.14 billion over the target figures for the same period.

Total collection during July-March period was Rs27.4 billion against a target of Rs29.4 billion, showing a shortfall of Rs1.99 billion due to short-billing, higher line losses, short release of subsidy for GST by the government and short-recovery from public sector.

A net profit of Rs108 million was visualised for PS during January-March 2003. However, due to increase in sales and improvement in sale prices, the profit of Pakistan Steel increased to Rs310 million.