Discos list factors behind rising circular debt

ISLAMABAD: The rising gap between the consumers-end billing and collection, tariff differential subsidy claimed from government, collection of GST by the Federal Board of Revenue (FBR) on assessment instead of actual collection, and transmission as well as distribution losses have been cited as main reasons behind circular debt in the power sector.

This was disclosed in a recent briefing by distribution companies, including Sukkur Electric Power Company, that Ministry of Water & Power had directed Discos years back to incorporate loan and markup amount in their books of accounts and submit compliance report. The government had established Power Holding (Private) Limited (PHPL) to arrange the funds for settlement payment of IPPs through Ministry of Finance. The PHPL requires finances for the purpose of onward lending to Discos for funding of repayment liabilities of Discos towards NTDC/CPPA-G through a tripartite agreement among Discos, PHPL and a syndicate of 16 commercial banks lead by Habib Bank Limited.

Published in Business Recorder, 11th July, 2018