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Circular debt, outages: PPP and PML-N trade barbs

July 14, 2013
Federal Minister for Water and Power Khawaja Mohammad Asif addressing PML-N workers.—Online Photo
Federal Minister for Water and Power Khawaja Mohammad Asif addressing PML-N workers.—Online Photo

ISLAMABAD: The PML-N and the PPP traded barbs over loadshedding and the circular debt affair on Saturday after the latter called upon the government to explain why there had been no let-up in power cuts even after the payment of a staggering Rs300 billion to producers.

Syed Naveed Qamar, a PPP MNA, ridiculed the government’s earlier claim that the power situation would improve within days of the payment, saying that it had further deteriorated despite passage of several weeks and pumping in borrowed money into power sector.

The government instantly came out with a response, saying that only 8,000MW of electricity was being generated on a daily basis when the PPP government completed its term while at present 1,4200MW was being produced.

Talking to Dawn, Information Minister Pervez Rasheed attributed the difference in power generation to the clearance of the circular debt that had risen to over Rs500bn during the PPP government. He blamed the previous government for the alarming level of the debt. “We are simply trying to address the issue we have inherited from the previous government.”

The Minister for Water and Power, Khawaja Mohammad Asif, came up with the precise figures and said the “amount has not disappeared”. So far Rs326bn has been paid to power producers and the rest of the debt will be cleared soon, he said.

He said 14,650 megawatts were produced on Friday — a level reached after one year. On Saturday, he said, the production level had touched 15,170MW, though for a brief period, which was a record as compared to generation level in recent past.

This happened only because of better management and clearance of circular debt, the minister claimed.

He advised Mr Qamar to raise the issue at a formal channel. “He is a member of the National Assembly. We will be obliged to give response in the house.”

Mr Asif said outages caused by technical problems and inefficient transmission system should not be regarded loadshedding.

He said it was a government priority to provide electricity to the areas where bills were being paid. Referring to some demonstrations, he said they were being held in the areas where bills were not paid.

Mr Qamar said the deteriorating power situation should serve to open eyes of the rulers to the reality that the crisis could not be ended by robbing people to pay to big business. “It calls for rooting out the causes of circular debt”.

Frustrated by increasing loadshedding, he said, the All Pakistan Textile Mills Association (APTMA) had issued a fact sheet that showed that the power crisis had worsened. According to the fact sheet, textile industry in Punjab is on the verge of destruction because coupled with daily loadshedding of 10 hours, it is denied gas for five days a week. On the other hand, the industry faced only four hours of loadshedding and was supplied gas for five days a week in July last year, the fact sheet said.

Mr Qamar said the basic issue was the huge difference between the production cost and the price at which electricity was sold. If electricity continues to be produced at the rate of over Rs14 per unit and sold at about Rs9 per unit, the problem will persist.

He said even if the circular debt was cleared now, it would emerge again unless the basic structural issues were addressed.

As the power policy was now being manipulated by power producers, he said, it was unlikely that the vested interests would permit addressing the fundamental issues in power sector.

The PPP leader said in the past Chief Minister of Punjab Shahbaz Sharif held open kutcheries at Minar-i-Pakistan and led demonstrations against loadshedding, and asked why he was not resorting to such gimmicks now.

He urged the government to explain why the revised PC-1 of the Nandipur power project had raised its cost from $329 million to over $574m.

He said Chinese contractor Dongfong Electric Corporation had demanded $40m in cost escalation. This, with the increase in the cost due to extended insurance period, would raise the cost of the project to nearly $400m at the most but it had been “mysteriously” increased to $574m, he said.

He demanded an inquiry into what he said “the worst example of white collar crime to rob the public”.

The information minister held the PPP responsible for the cost escalation and said since the project had been delayed for four years, the difference in rupee dollar parity had increased the cost. He said machinery imported for the project had been lying at the port for four years and added that part of it had been damaged and some components had disappeared.