ISLAMABAD: The previous government in its last days in power burdened electricity consumers with surcharges of Rs2.3 per unit, escalating power bills and increasing their miseries.
This would create challenges for the next elected government and in a meeting of the Economic Coordination Committee on May 24th, the previous government’s economic managers admitted the financial position of the power sector was quite precarious, reported Express Tribune.
Several reasons were attributed for this issue which included undesirable performance in terms of regulatory benchmarks for reduction of losses, improvement in recovery, delay in detailed tariff determination.
Although, detailed tariff determination has been notified, however, its impact would be felt in coming few months.
And the ECC was apprised, due to rising energy sales as result of increased generation had also caused the circular debt build-up.
This matter also came up for discussion during a previous meeting held on May 22nd at the office of the minister of finance.
The meeting was attended by Power Division Secretary and it was decided to obtain another loan for the power sector since there was no provision to give financial cushion under the budgetary head.
During the ECC meeting, it was proposed Rs50 billion should be obtained in loans from commercial banks to be arranged via Government Holdings Private Limited (GHPL).
The loan obtained by GHPL would be used to settle the liabilities of power distribution companies to the Central Power Purchasing Agency (CPPA) and other entities of the sector.
Government guarantee would be given by Ministry of Finance for the loan. The repayment of this loan would be borne by electricity consumers by an enactment of a surcharge for an interim duration of six months.
This would basically permit to overdue payments in overall payables of the CPPA to several entities of the sector.
For the servicing of loan facilities of GHPL would need imposition of a surcharge of Rs1.15 to Rs1.75 per unit.
And the servicing of this new loan being obtained, and the repayment of the principal will be collected via levying of an additional surcharge of Rs0.55 per unit after go-ahead of National Electric Power Regulatory Authority (Nepra).
The ECC after conducting detailed discussions gave its go-ahead with the condition that Finance Division would make adjustments in tariff differential claims after six months.