ISLAMABAD, May 21: Despite a massive 87 per cent increase in electricity tariff over the past four years, the government has failed to solve the problem of loadshedding and curb constant rise in the volume of circular debt.

Prices of petroleum products and natural gas have also significantly increased during that period.

The average electricity tariff was Rs4.74 pr unit when the PPP government came to power in March 2008. The electricity shortfall was about 2,000MW and the circular debt stood at Rs410 billion.

After the recent hike in tariff, the cost of electricity has reached Rs8.88 per unit. Power shortfall shot up to more than 4,000MW this month and circular debt to about Rs670 billion.

But officials still claim that the government is spending billions of rupees in subsidies to provide cheap electricity to the masses.

“The government is currently giving a subsidy of Rs3.01 per unit and taking the budgetary pressure,” the water and power secretary said.

He said electricity generation and transmission was expected to be around 90 billion units this year and subsidy for the power sector would be Rs270 billion.

This is despite the fact that the government has, after increasing the tariff by Rs4.14 per unit, failed to streamline the power sector and the consolidated circular debt has reached Rs6,689 billion.

The figures were recently presented to the National Assembly’s Standing Committee on Finance.

“Since the government has not been able to pay the cost of electricity, the circular debt is rising and has led to financial problems for power generation companies,” an official of the National Transmission and Distribution Centre (NTDC) told Dawn.

The main reason for high cost of power generation is the rising oil prices in the international market because more than 4,600WM of the 11,500MW electricity produced in the country is being generated through furnace oil.

“Look at the international oil prices; crude is hovering around $110 per barrel, raising the overall cost of electricity generation,” an official of the water and power ministry said. The officials, however, ignored the fact that crude prices were around $110 in March 2008 when the present government took charge.

Besides electricity tariff, the government has significantly increased the prices of petroleum products over the past four years.

The prices of petrol and diesel have been raised by 75.46 per cent and 81.35 per cent, respectively, between March 2008 and May 2012.

When the government took the reins of the country, petrol was Rs58.70 per litre which now costs Rs103.36, while the price of diesel increased from Rs59 to Rs107 per litre.

HOBC, which was Rs69.88 per litre in March 2008, is now selling at Rs135.81.

While consumers are paying more for electricity, petroleum products and even natural gas, the overall situation continues to deteriorate.

Even finance ministry officials have expressed concern over gaps in the energy sector and failed to identify where the money is going.

“It is still an issue to see where the money is going despite increasing power rates. If we clear the circular debt from the budget it will come again in two months,” said a spokesman for the finance ministry.

A senior official in the water and power ministry conceded that there were reports of inefficiencies in electricity generation units owned by Wapda and corruption in the system. A few inquires have pointed out that officials were involved in selling oil and spare parts of generators.

“But nothing has been proved so far and not much has been done to assess the real causes of high generation cost and other issues in the power sector,” he added.