ISLAMABAD: The federal government has claimed over Rs225 billion in receivables from K-Electric, that also include an overwhelming Rs186.5bn as mark up on a principal liability of Rs38.8bn.

The power division, in its monthly report, put the power sector’s circular debt at Rs2.381 trillion as of end-Nov 2024. The debt stood at Rs2.678tr in Nov 2023 — a reduction of around 11pc.

The monthly circular debt report was released after a gap of more than six months.

The report claimed that all three heads in the circular debt — payables to power producers, payables to fuel suppliers and debt parked in Power Holding (Pvt) Ltd — declined during the first five months (July-November) of the current fiscal year, compared to the same period last year. its loss related inefficiencies deteriorated by a massive 35pc.

Circular debt fell to Rs2.3tr in November 2024 from Rs2.6tr a year ago

The power division said the overall circular debt in the power sector went down by Rs12 during the first five months (July-November) of the current year. compared to about Rs368bn increase in July-November period of 2023.

The report attributed the decline in power sector debt to over-collection in pending generation costs through quarterly tariff and fuel price adjustments (QTAs & FPAs), as well as other prior year adjustment recoveries. This included an over-collection on account of pending generation cost of Rs31bn in the first five months of the current financial year against an increase of Rs146bn during the same period of the previous year.

Additional recoveries to the tune of Rs234bn were reported under other adjustments through prior year

recoveries as of Nov 2024, against Rs133bn past recoveries at the close of Nov 2023.

The report claimed that KE’s total non-payments had amounted to Rs59bn by the end of November 2023, compared to Rs11bn non-payments during the current year as of Nov 2024.

The power division put total claims against KE at Rs225bn, built upon a principal of just Rs38.8bn.

Interestingly enough, the KE has been claiming more receivables from government entities, including provincial departments, and the two sides are engaged in negotiated settlements through arbitration.

It said the total payables to power producers declined by 11.7pc to Rs1.608tr in Nov 2024, against Rs1.822bn at the end of Nov 2023.

Liabilities

Liabilities parked in PHPL fell by 10.7pc to Rs683bn from Rs765bn in November 2023. Payables by generation companies to fuel suppliers fell fractionally in five months to Rs90bn from Rs91bn during the same period last year.

The amount budgeted by unpaid subsidies dropped to Rs5bn during the July-November period of current year against Rs10bn of same period last year.

As a consequence, the government paid Rs70bn in mark-up to banks this year against Rs63bn paid last year, because of higher interest rate environment.

The latest debt report conceded that the impact of discos loss inefficiency rose by more than 34pc to Rs94bn during the first month of the current fiscal year against Rs70bn in the same period of the previous year.

Their under-recoveries, however, dropped by half to Rs76bn, compared to Rs153bn during the first five months of the last fiscal year.

The total cost of losses in five months was put at Rs276bn and that of under-recoveries at Rs315bn.

Published in Dawn, January 22th, 2025