ISLAMABAD: While all the state-run power companies face non-payments from the government departments, private power utility K-Electric on Monday sought Finance Minister Muhammad Aurangzeb’s intervention for early payment of long outstanding dues worth billions of rupees from the federal and provincial entities.

In a statement, the Ministry of Finance said a KE delegation, led by its CEO Syed Moonis Abdullah Alvi and accompanied by Chief Financial Officer (CFO) Muhammad Aamir Ghaziani and Chief Regulatory Affairs Muhammad Imran Qureshi, met the finance minister and “raised the issue of delayed payments of KE’s consumer bills collected through the post office”.

Informed sources said the private power utility also sought the finance minister’s support for clearing sales tax refunds by the Federal Board of Revenue and electricity bills by the Sindh government.

Informed sources said the power division had also been pushing for payment of about Rs9bn by Pakistan Post to all the distribution companies on account of electricity bills it had collected until April 2022. Of the total, about Rs4bn was payable to KE. The remaining Rs5bn pertained to other Discos, led chiefly by Rs2.5 of Hyderabad Electric Supply Company (Hesco), Rs800 million to Quetta Electric, Rs750m to Lahore Electric and Rs785m to Sukkur Electric.

Minister urges addition of cheaper energy to reduce power cost

The power division had been pursuing the finance ministry for clearance of funds retained by Pakistan Post for onward payments to the Discos concerned.

“In view of current recovery efforts being made under the directives of the Prime Minister’s Office, it is again requested to release the retained amount of Rs8.765 billion to Pakistan Post for onward payment to Discos to clear the outstanding liabilities of the generators accordingly,” the power division reminded the finance ministry recently without any outcome.

The KE team also asked the finance minister to help recover about Rs9bn from the Sindh government and support KE’s efforts for debt write-offs. The finance minister asked KE to take up its payment issue with the Sindh government on its own.

KE also wanted clearance of sales tax refunds that had been stuck with FBR for a long time. The minister promised to look into the matter but expected the KE to give up its markup claim on both Pakistan Post and FBR refunds. The KE team reportedly showed its willingness to forego markup claims on payment of principal dues.

The MoF statement said the representatives from K-Electric told the finance minister that the agreement signed between the government and KE earlier this year had addressed some issues, and KE was now vigorously working on implementing the new generation projects to improve its electricity mix. The minister “assured the K-Electric delegation that the matter of delayed payments would be addressed”. He asked the KE team to focus on improving service delivery in Karachi and expedite its plan to add cheaper generation capacity to reduce the electricity cost.

It may be recalled that payables by Pakistan Post to Discos, KE and some other public service agencies had reached Rs40bn in March 2022 on account of bills it collected on their behalf, forcing these entities to resort to expensive bank borrowing despite government guarantees to clear liabilities of fuel suppliers and power producers.

The issue emerged after the Ministry of Finance stopped Pakistan Post in 2021 from bill collection. The Ministry of Communication had reported to the prime minister that Pakistan Post had been providing services (agency function) to other entities, including collection of utility bills, for a long time. Funds were collected on behalf of various companies, deposited in Central Account No.1 (Non-Food), and released to respective partners on the release of funds by the finance division.

The process had been discontinued by the Ministry of Finance, which started releasing funds to Pakistan Post only against employee-related and operational expenses. “Resultantly, the amounts collected on behalf of partner organisations are not being cleared, and their liabilities are increasing with every passing day,” the communication secretary reported.

Published in Dawn, July 9th, 2024

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