Pakistan’s power sector circular debt soars to Rs2.635 trillion

WEB DESK: Pakistan’s power sector circular debt has escalated by Rs325 billion during the initial seven months of the ongoing fiscal year, spanning from July to January 2024.

This surge has propelled the debt to a staggering Rs2.635 trillion, in contrast to the Rs2.31 trillion recorded at the conclusion of the fiscal year 2023.

The latest debt report, unveiled by the Power Division, delineates various factors contributing to this upsurge. Predominantly, the escalation is underscored by a notable increase of Rs214 billion in pending generation costs.

Additionally, inefficiencies and losses incurred by Distribution Companies (DISCOs) witnessed an upswing, with under-recoveries rising by Rs198 billion and losses escalating by Rs86 billion during this seven-month period compared to FY23.

Furthermore, interest charges borne by Power Holding Limited (PHL) and Independent Power Producers (IPPs) surged by Rs72 billion in the first seven months of the fiscal year 2024, exacerbating the debt predicament. Notably, the data unveils an increment of Rs11 billion in dues by K-Electric during this timeframe.

Conversely, there was a discernible decrease observed in Budgeted but unreleased subsidies, prior year recoveries (other adjustments), and stock payments, totaling Rs3 billion, Rs116 billion, and Rs137 billion, respectively, during 7MFY24 compared to FY23.

Despite these fluctuations, the burden of dues, inefficiencies, and losses has considerably amplified, leading to a net escalation in debt during 7MFY24 compared to the fiscal year 2023.

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