LAHORE: The woes of the power sector, already collapsing under the burden of circular debt and countrywide unrest against prolonged loadshedding, are likely to worsen with its nine-month recoveries dropping to the low level of 83 per cent – adding Rs90 billion to the receivables.

According to the latest report of Pakistan Electric Power Company (Pepco), the total power sector receivables shot up to a massive Rs375.870 billion in the first nine months of the current fiscal year because of distribution companies’ failure to recover dues. During the last three quarters (July-March), the companies (Discos) issued bills for Rs535 billion, but could recover only Rs455 billion – a gap of Rs90 billion.

The Karachi Electric Supply Company (KESC) has emerged as the biggest defaulter with a bill of Rs60.397 billion. In July last year, its default stood at Rs40.89 billion and over the next nine months, it added Rs20 billion, taking the total to over Rs60 billion.

The Government of Sindh is the second biggest defaulter with a staggering Rs50.435 billion. It started the fiscal year with an arrear of Rs39.23 billion and by March defaulted on another Rs11 billion. They are followed by Fata (Rs20 billion), the Punjab government (Rs15.19 billion), the AJ&K (Rs14.96 billion), the federal government (Rs7.62 billion) and Balochistan (Rs1.07 billion).

“This is a disastrous situation which can cause existential disorder for the country,” says an official of Pepco.

Over the past nine months, the sector received massive financial relief on two accounts: tariff increase and fuel adjustment charges. These measures were expected to end the crisis. As a result of these measures, the billing increased from Rs456.40 billion (during July-March 2011) to Rs535 billion in the first nine months of this year – an addition of around Rs79 billion.

The increase in billing took place despite an increase in loadshedding this year as compared to last year.

The government took a big political risk by taking the two measures which sparked violent protests which claimed human lives.

But the Discos have made a mockery of the relief. While their billing increased to Rs79 billion, they failed to recover Rs90 billion from defaulting consumers and thwarted efforts to improve the sector.

“This is a funny situation,” says an official of the Ministry of Water and Power. The power sector is suffering a daily loss of about Rs1.1 billion, but the distribution companies are reaping profit. These companies simply deduct their operation and maintenance charges from whatever they recover, and pass on the entire loss, including their own inefficiency to the sector and, by extension, to the government. The government on its part keeps increasing the tariff, creating a vicious circle, he concluded. —Ahmad Fraz Khan