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Consumers to repay Rs136 billion circular debt

The government has chalked out a plan under which electricity consumers will be made to pay off the debt the government raked up to clear the circular debt and repay some Independent Power Producers (IPPs).

This amount was borrowed from commercial banks and has now reached a whopping Rs136 billion, including Rs15 billion interest component, reveals an official document available with The News.

In the last five years, not only has the government failed to ensure uninterrupted supply of gas and electricity, it has also frequently raised the prices of both. At the tail end of its tenure, the government is now making consumers to pay for the debt it has accumulated.

Circular debt arises when producers of energy are unable to arrest system losses and cannot recover dues from influential persons in the private and public sector departments.According to the official record, the Ministry of Water and Power, in consultation with the finance ministry, borrowed Rs136 billion from banks to pay the circular debt and repay

those IPPs which had invoked sovereign guarantees. Subsequently, the power ministry opened escrow accounts for each electric power distribution company (disco) and asked them to deposit their proportion of loan repayment directly into these accounts.

As per the documents, the Hyderabad Electric Supply Company is to pay Rs17.04 billion; Quetta Electric Supply Company Rs21.51 billion; Peshawar Electric Supply Company Rs39.48 billion; Sukkur Electric Power Company Rs15.73 billion; Multan Electric Power Company Rs18.46; Lahore Electric Supply Company Rs9.32 billion; Gujranwala Electric Power Company Rs3.62 billion; Faisalabad Electric Supply Company Rs6.97 billion and Islamabad Electric Supply Company Rs4.27 billion.

These discos have now been asked to petition the National Electric Power Regulatory Authority (Nepra) for an increase in power tariff so that they can repay the loan with interest. While the top Nepra officials are currently reviewing these petitions, most energy sector analysts expect the regulator and government to lock horns over the issue. A decision to punish the honest consumers with higher tariffs for the faults of the defaulters, argue these observers, is unlikely to find favour with Nepra.

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