Business

Power sector circular debt tops Rs2.64tr

Published

1 year ago

Farwa

Mounting debt becomes major concern for government.
Debt increases Rs394bn from July 2022 to May 2023.
It rises despite tariff hike of Rs7.9 per unit in July 2022.

ISLAMABAD: The power sector circular debt has reached a staggering amount of Rs2.646 trillion by the end of May 2023, registering an increase of Rs394 billion from July 2022 to May 2023, according to a report by the Ministry of Energy.

The mounting debt has become a major concern for the government and power sector policymakers, as it indicates monthly inefficiencies in the energy system, particularly in generation and distribution, resulting in an additional burden of Rs35.82 billion ($132.2 million) each month.

This comes despite the government’s implementation of a base tariff increase for electricity last July, following pressure from the International Monetary Fund (IMF), which demanded tariff measures to reduce the debt, rejecting the notion of bridging the gaps in power holding companies.

Despite a significant tariff hike of Rs7.9 per unit in July 2022, the circular debt continued to rise, as underlying structural issues in the sector remained unaddressed, leading to a substantial financial burden on loyal power consumers, amounting to billions of rupees every month.

The data reveals that the cumulative debt volume stood at Rs2.253 trillion by the end of the fiscal year 2021-22, which ballooned to Rs2.646 trillion by the end of May 2023.

Meanwhile, payables to power producers surged by Rs420 billion to Rs1.771 trillion during these 11 months. The state-owned generation companies (GENCOs) also saw their payables to fuel suppliers rise from Rs101 billion to Rs110 billion during the same period.

However, a positive development was observed in the amount of debt parked in Power Holding Limited (PHL), which decreased by Rs35 billion to Rs765 billion from the previous figure of Rs800 billion recorded at the end of June 2022.

The inefficiencies of power distribution companies (DISCOs) have emerged as a significant burden on the financial health of the power sector, primarily due to their high losses and low bill recoveries.

These shortcomings in power transmission and distribution are impeding the sustainable provision of energy services, resulting in elevated energy prices and amplified business costs.

During the eleven-month period, the power distribution companies (DISCOs) incurred losses and inefficiencies, along with non-recoveries of bills, contributing Rs374 billion to the circular debt, accounting for 95% of the total addition of Rs394 billion to the overall debt stock.

DISCOs’ losses and inefficiencies amounted to Rs125 billion, while low bill recoveries added Rs249 billion during July-May 2022-23.

The breakdown of circular debt additions further shows that Rs87 billion was attributed to the payment of interest to power producers on delayed payments, with the government currently owing Rs1.77 trillion to these generators.

Additionally, Rs58 billion was added to the circular debt due to interest payments to banks on the Rs765 billion parked in a power holding company.

To address this issue, the government has imposed a debt servicing surcharge of Rs3.23 per unit, passing on the cost of inefficiency to power consumers.

Furthermore, Rs171 billion was included in the circular debt due to delays in the recovery of generation costs through quarterly and monthly fuel charges adjustments. An additional Rs57 billion was added to the debt stock due to non-payment by K-Electric.

Business

An investigation was “launched” into PTA’s inability to get Rs. 78 billion back from Telcos

Published

18 hours ago

Farwa

The PTA has reportedly been instructed to reply to NAB by July 29. According to the enquiry, the national exchequer has suffered losses as a result of the delay in collecting dues.

The PTA has been asked to provide NAB with information about any pertinent records, court proceedings, and overdue bills. The NAB Karachi has summoned the PTA officials to appear with all pertinent documentation.

All of the principle sum has to be paid by the LDI firms, according to sources. But due to judicial stay orders, the collection of dues has been impeded.

These sources further state that a steering group has been established by the Ministry of IT to supervise the issue of dues recovery.

In a previous event, the tariffs levied on importing cell phones from outside were clarified by the Pakistan Telecommunication Authority (PTA).

Contrary to what some internet reports claim, PTA clarified in response to recent news regarding the tariffs on mobile phone imports that there hasn’t been a formal decision to remove these levies in Pakistan.

the PTA.Pakistanis living abroad will be the only ones free from these levies, according to the PTA. A SIM card can be inserted and the phone restarted to temporarily register a device for non-PTA mobile subscribers.

Business

Weekly inflation in Pakistan increased by 0.17 percent.

Published

18 hours ago

Farwa

The SPI for the week under review in the aforementioned group was reported at 321.95 points, as opposed to 321.40 points during the previous week, according to the PBS statistics.

The SPI for the combined consumption group saw a 20.09 percent increase in the week under review compared to the same week the previous year.

The weekly SPI includes 51 necessary items for every spending group and 17 urban areas, with a base year of 2015–16 = 100.

The SPI for the lowest consumption category, which is up to Rs 17,732, grew by 0.08 percent from 311.97 points to 312.22 points this past week.

0.18 percent,The index of consumption for the lowest consumption groups, which are Rs 17,732-22,888, Rs 22,889-29,517, Rs 29,518-44,175 and above Rs 44,175; increased by 0.13 percent, 0.15 percent, 0.18 and 0.19 percent, respectively.

Nineteen (37.25%) of the fifty-one commodities had price increases over the week, eight (15.69%) had price decreases, and twenty-four (47.06%) had unchanged pricing.

On a weekly basis, the following commodities saw significant price decreases: tomatoes (9.19%), onions (2.14%), LPG (1.04%), bananas (0.53%), wheat flour (0.35%), potatoes (0.17%), pulse masoor (0.16%), and bread (0.05%).

Chicken (4.80%), garlic (2.01%), pulse gramme (1.87%), eggs (1.71%), beef (0.93%), gur (0.89%), pulse moong (0.84%), fresh milk (0.45%), firewood (0.23%), and cigarettes (0.12%) were among the items whose average prices increased significantly week over week.

The commodities that saw a year-over-year decline were: wheat flour (31.75%); cooking oil (13.44%); vegetable ghee 2.5 kg (10.42%); vegetable ghee 1 kg (9.85%); mustard oil (8.33%); eggs (5.82%); rice basmati broken (4.15%); and tea package (2.52%).

Gas prices for Q1 (570.00%), onions (96.01%), pulse gramme (40.39%), powered milk (39.11%), garlic (34.61%), pulse moong (29.77%), men’s sandals (25.01%), beef (23.52%), salt powder (23.28%), pulse mash (22.50%), and energy saver (17.96%) were among the commodities whose average prices increased year over year.

Business

The price of gold has drastically dropped in Pakistan.

Published

2 days ago

Farwa

As per the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the cost of 24-karat gold per tola decreased by Rs 2,300, standing at Rs 250,500.

A kilogramme of 24-karat gold costing Rs1,972 less at the local market, making it worth Rs2114,763. Ten grammes of 22-karat gold had a price decrease to Rs196,866 as well.

After losing a significant $43 during the day, the rate per ounce of gold on the international market also decreased. It currently stands at $2,370.

On Thursday, the price of 24-karat silver also experienced a decline, falling by Rs60 to settle at Rs2,860 petal.