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Power division claims drop in monthly circular debt to Rs 15b

Power division claims drop in monthly circular debt to Rs 15b

ISLAMABAD: Power division on Friday announced that the incumbent government’s capping plan on circular debt has bear fruit as the monthly rise in the debt that was once Rs 38 billion has drastically dropped down to at most Rs 15 billion.

According to a statement issued by the power division spokesman, in September 2018, the circular debt stood at Rs1.33 trillion with a monthly increase of Rs 38 billion.

“However, under the circular debt capping plan initiated by the incumbent government, the monthly amount has now dropped between Rs12 billion to Rs15 billion,” he said.

Debt was limited to Rs130 billion during the 2019-20 as the government owes an overall amount of Rs978 billion towards the public and private sector power companies.

The power holding company has borrowed up to Rs804 billion from the banks and the overall debt of the power sector is up to Rs1782 billion, he said while denying the media reports quoting the overall debt at Rs1.9 trillion.

In December 2019, Federal Minister for Power Omar Ayub Khan rejected a report that the country’s circular debt is rising by Rs21 billion per month.

” The gross circular debt buildup for Q 1 [first quarter of fiscal year] was Rs 77 bn. This number was before subsidy payment (TDS) in the budget. So of this 77 bn , Rs 39 bn is paid by the budget leaving only Rs38 bn as net addition to Circular debt which translates to about 12 bn a month,” he clarified in a series of tweets.

He said: “The news item only quotes the month of August prior to subsidy. TDS is subsidy to ensure that same tariffs are applied across all electric DISCOs & to provide deeply discounted electricity to the poorest consumers using 300 units and below as well as Agricultural Tube Well subsidy.”