PM orders audit of circular debt claims

Published May 31, 2017
Prime Minister Nawaz Sharif ordered a third-party audit of the fresh circular debt claims — File
Prime Minister Nawaz Sharif ordered a third-party audit of the fresh circular debt claims — File

ISLAMABAD: Prime Minister Nawaz Sharif on Tuesday ordered a special audit of fresh circular debt claims of Rs480 billion and third-party analysis of the power demand-and-supply situation on the basis of projects that are coming up for commercial operations.

While presiding over a meeting of the cabinet committee on energy, the prime minister directly asked former water and power secretary Younus Dagha questions about the rosy days he had promised last year.

A senior official told Dawn that Mr Dagha, who was called on the prime minister’s special instruction, termed the prevailing situation “a management problem”. Otherwise, there was no “exceptional surge” in demand, he said. He told the meeting that demand and supply numbers were almost unchanged from last year, even though fresh generation capacity had also come on line.

Mr Dagha told the prime minister that he would be involved in the micromanagement of distribution and generation companies and kept their workforce on its toes. He said it was still a management issue and could be managed.

The prime minister was not satisfied and believed that he was misled last year. He said summer was no excuse for an increase in power shortfalls because it was expected and should have been proactively planned for.

Finance ministry contested payables of Rs480bn reported by power ministry

The prime minister also asked about idle generation capacity and whether it could be put to use to minimise public suffering. However, Water and Power Secretary Yousaf Naseem Khokhar explained that the option was deliberated at length but was not found feasible. Rental power plants like Reshma and Gulf were too obsolete and could not meet sustainability tests and tripped immediately after being energised, he said.

On the other hand, small power projects like Fatima and Southern Electric Power Ltd were under litigation.

Sources said the power ministry reported estimated payables of Rs480bn, which were contested by the finance ministry. The prime minister was told that the secretaries of finance and power ministries had deliberated on the financing plan, but the two top officials strongly differed over the payable claims.

It was noted that various power companies owe Pakistan State Oil Rs301bn, which is a record high.

The prime minister ordered that accurate figures for the estimated power demand and supply from existing as well as under-implementation plants over the next 12 to 36 months should be calculated. He also asked the authorities to re-verify the amount of circular debt from third-party auditors to ascertain claims attributed to fuel payments, line losses and other factors.

The prime minister stressed on the inclusion of provincial representatives in decision-making on important issues related to the power sector, particularly in relation to the proposed amendments to the National Electric Power Regulatory Authority.

Minister for Finance Ishaq Dar, Minister for Water and Power Khawaja Muhammad Asif, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, Minister of State for Information and Broadcasting Marriyum Aurangzeb and other senior officials attended the meeting.

Published in Dawn, May 31st, 2017

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