Circular debt projected to touch Rs1.7 Trillion

The Express Tribune/28-11-2019

ISLAMABAD:  Special Assistant to the Prime Minister on Petroleum and Chairman of the Energy Task Force gave a briefing on the government’s power sector privatization policy at a meeting of the National Assembly’s Standing Committee on Privatization chaired by PPP’s Syed Mustafa Mahmud. According to his viewpoint, the power distribution companies cannot be privatized for two years and the circular debt would soar to Rs1.7 trillion by the time the government is able to arrest its growth. The top prime ministerial aide further added that the circular debt that had amounted to Rs1.28 trillion in August 2018 will upsurge to Rs1.7 trillion by December next year at which point, he said, it would halt intensifying. His statement suggests that the circular debt would cultivate 41% during the first nearly two and a half years of PTI’s rule. Babar once again claimed that compared to the previous monthly addition in the circular debt of Rs38 billion, the increase had decelerated to under Rs10 billion a month, a claim disputed by the World Bank and the IMF during recent talks. He further said that the projected Rs1.7 trillion circular debts was then planned to be retired by booking part of it as public debt, settling a part of it against privatization proceeds and by improving systemic efficiency.

Moreover, he confidently urged that the circular debt growth would be cut to zero by December 2020 and, if the distribution companies were to be privatized before that, the government would have to give heavy discounts to buyers. Furthermore, he was of the view that before August 2018, the unpaid power subsidies stood at Rs825 billion, Babar said, adding that the previous government had announced the subsidies, including the Industrial Support Package, but had never budgeted the amount. Giving a timeline for the privatization of the loss-incurring power sector, Babar said the entities could not be privatized for another two years, the key reasons being the weak writ of the government, large territorial jurisdictions of some power distribution companies and uniformed tariff systems under which good and bad discos were treated equally. He said the actual privatization of power distribution could only begin by December 2021, adding that the Economic Coordination Committee (ECC) wanted only a few distribution companies to be offered for sale before December 2021 and, for that reason, the Lahore Electric Supply Company (LESCO) and the Islamabad Electric Supply Company (IESCO) had been put on the privatization list.