LAHORE: Recoveries made by Pakistan Electric Power Company (Pepco) declined to only 89.8 per cent during 2010-11, creating a deficit of Rs63 billion in its revenues and adding to the burden of power sector circular debt.

According to financial records of the company, it was able to collect only Rs556 billion against bills of Rs618.9 billion, a loss of Rs62.9 billion. The company had made a recovery of 104.7 per cent the previous year as it had also recovered some old debts.

Even the recovery rate of 89.8 per cent was made possible through gross over-billing in June, according to sources. During the month, the company charged its consumers a staggering Rs65.5 billion against an 11-month average figure of Rs50.3 billion.

Interestingly, in June it recovered Rs77.2 billion against the bills of Rs65.5 billion.

The Pepco’s failure to recover its bills and other dues has served to increase its receivables to a whopping Rs285.846 billion (almost equal to its current circular debt) over the last one year.

The company started the year with carryover dues of Rs204.189 billion, which by the end of the year had swelled to Rs285.846 billion, an increase of Rs81.657 billion.

In 2010-11 the company burdened taxpayers with more than Rs290 billion in subsidies and failed to recover bills and other dues of Rs81 billion.

It received Rs150 billion in tariff differential subsidy during the year — Rs120 billion in previous subsidy and Rs20 billion in advance subsidy. The failure to recover dues will surely increase the subsidy bill this year.

The power sector circular debt is currently increasing by almost Rs1 billion a day. Last year, the government had absorbed over Rs301 billion in circular debt, which has again swelled beyond the Rs300 billion mark.

“The problem with Pepco is that no one is in-charge of its finances,” says a former finance officer. A former chief finance officer of the National Transmission and Dispatch Company is looking after its affairs.

According to the sources, the water and power ministry is indulging in criminal negligence by keeping the important post vacant. The official in this position controls a revolving account of some Rs1.2 trillion (Rs600 billion in income and a matching amount in expenditure) and yet a part-timer has been asked to “just look after it”.

When contacted, Abdul Majid Alvi, who is looking after the Pepco accounts, said: “Target-oriented efforts are being made to recover outstanding amount, which includes severing connections of government offices as well as individual connections.

However, due to the law and order situation in different parts of the country and non-paying habit of consumers results arenot up to the mark.”

About higher billing in June, he said: “Discos consumption in June was 13 per cent higher than in May. It is due to high summer season.”

“Recovery of 2009-10 year includes Rs85 billion received from Government of Pakistan against Fata arrears. Actual recovery during 2009-10 was 88.6 per cent, which shows that recovery in 2010-11 increased by 1.2 per cent as compared to the previous year.”