LAHORE: The power sector total receivables have risen to Rs577.330 billion in the first quarter (July-September) of this fiscal year, as recoveries dropped to 80 per cent, the sector recovering only Rs265bn against billing of Rs329bn.

The sector started the year with a carry-over default of Rs512bn, but has added Rs65bn to the tally in the next three months, at a rate of under Rs21.66bn a month, or Rs722 million a day.

“This is despite the official attention being riveted to recovery, and the ministry, along with all distribution companies, running a high profile recovery campaign,” regrets a former head of Pakistan Electric Power Company (Pepco).

By the end of June last year, the recoveries were at 89.70pc, which dropped by 10pc in the next three months. This failure to recover the bills lies at the heart of current crisis in the power sector, he claimed.

According to the latest data compiled by Pepco, the sector billed Rs101bn in July, but recovered only Rs79.80bn. In August, its billing touched a new peak of Rs115.70bn (many believe because of massive over-billing but the ministry insists it happened due to addition supply of electricity) and it received only Rs93.80bn.

In September, the billing came down to Rs122.60bn and so does the recoveries; at Rs91.40bn. Thus, in three months, the total billing stood at Rs329.30bn, with recoveries falling to Rs265bn, leaving a gap of Rs64.30bn.

Out of Rs65bn added to the receivables, Rs40bn default has come from the private sector. Its dues (commonly known as private default) have swelled from Rs355bn by the end of June to Rs395bn by the end of September.

“The governments of Sindh (Rs61bn) and Azad Jammu and Kashmir (Rs42bn) and the K-Electric (Rs37bn) put together owe over Rs140bn,” says a former general manager (finance) of Wapda.

If the federal government cannot control these entities, what could one expect from the private sector? The provincial governments (excluding AJK) now owe Rs93bn, up from Rs84bn in June this year, but the federal government cannot do anything about them. “It seems to be a classic case of blind leading the blind; no one knows where is he heading for?

“The political leadership, devoid of a proper strategy, keeps pushing for recoveries and failing consistently. The sector managers, with overwhelming majority working on ad hoc basis, are just trying to keep their books balanced. In the process, the sector is sinking”, he said.

The PML-N government cleared around Rs500bn circular debt when it took over and hoped to ease load shedding. Now it owes over Rs350 billion in circular debt, and the amount of receivables is over and above that figure.

“The sector owes Rs350 billion, which is ballooning due to interest payments as well, and it has to receive Rs577 billion, which it cannot recover. For how long can the government fill in to create the balance, one can only wait the see,” he concluded.

Published in Dawn, November 19th , 2014