Poor Performance Of Discos A Reason Of Circular Debt: Senate Body

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Poor performance of Discos a reason of circular debt: Senate body

The Senate Special Committee on Circular Debt Friday observed that one of the main reasons behind the piling up of circular debt was poor performance of Power Distribution Companies (Discos).

ISLAMABAD, (UrduPoint / Pakistan Point News - 17th Aug, 2018 ) :The Senate Special Committee on Circular Debt Friday observed that one of the main reasons behind the piling up of circular debt was poor performance of Power Distribution Companies (Discos). The Committee had been constituted with the sole purpose to dig out the actual causes of circular debt and suggest remedies for overcoming this problem was chaired.

In a meeting, chaired by Shibili Faraz, the members of the Committee were of the view that fixing of Discos and bringing about change in regulatory mechanism would help overcome the circular debt problems on permanent basis. Unless the issue of Discos is addressed, the circular debt would persist; they said adding that the main problem was with Discos, so this needed to be addressed first.

The Committee observed that if the transmission loss limit for Discos is allowed to be enhanced, it would further aggravate the situation and put further burden on national exchequer.

The members observed that even if this limit is enhanced, it would not resolve the circular debt issue.

Earlier, the senate body was given detailed briefing by the Ministry of Energy, Power Division and Ministry of Finance on amount of Rs582 billion parked in the Power Holding Company (pvt) Ltd as on July 2018.

On the occasion, the Chairman observed that delay in loan payments was incurring further loss to the national exchequer in terms of enhancing KIBOR plus charges. The Chairman lamented that there was lot of variation between the figures of receivables and payables and was very difficult for the committee to reconcile these figures for proper analysis. He urged the Ministry of Power to ensure an integrated system where consolidated figures are given so that proper analysis of data is done. "There should be one integrated and comprehensive balance sheet," he said.

Meanwhile, the committee observed that circular debt has enhanced from Rs120 billion annually now to around Rs250 billion.

Discussing the issues of Rs 257 billion power sector receivables by Balochistan, the Committee was informed that Rs232 billion of this amount was receivable from the agricultural tube-well sector.

Some members were of the view that the government would have to write-off this debt and help ininstallation of solar power units to reduce the debt burden.