Business

Power sector circular debt tops Rs2.64tr

Published

10 months ago

Farwa

Mounting debt becomes major concern for government.
Debt increases Rs394bn from July 2022 to May 2023.
It rises despite tariff hike of Rs7.9 per unit in July 2022.

ISLAMABAD: The power sector circular debt has reached a staggering amount of Rs2.646 trillion by the end of May 2023, registering an increase of Rs394 billion from July 2022 to May 2023, according to a report by the Ministry of Energy.

The mounting debt has become a major concern for the government and power sector policymakers, as it indicates monthly inefficiencies in the energy system, particularly in generation and distribution, resulting in an additional burden of Rs35.82 billion ($132.2 million) each month.

This comes despite the government’s implementation of a base tariff increase for electricity last July, following pressure from the International Monetary Fund (IMF), which demanded tariff measures to reduce the debt, rejecting the notion of bridging the gaps in power holding companies.

Despite a significant tariff hike of Rs7.9 per unit in July 2022, the circular debt continued to rise, as underlying structural issues in the sector remained unaddressed, leading to a substantial financial burden on loyal power consumers, amounting to billions of rupees every month.

The data reveals that the cumulative debt volume stood at Rs2.253 trillion by the end of the fiscal year 2021-22, which ballooned to Rs2.646 trillion by the end of May 2023.

Meanwhile, payables to power producers surged by Rs420 billion to Rs1.771 trillion during these 11 months. The state-owned generation companies (GENCOs) also saw their payables to fuel suppliers rise from Rs101 billion to Rs110 billion during the same period.

However, a positive development was observed in the amount of debt parked in Power Holding Limited (PHL), which decreased by Rs35 billion to Rs765 billion from the previous figure of Rs800 billion recorded at the end of June 2022.

The inefficiencies of power distribution companies (DISCOs) have emerged as a significant burden on the financial health of the power sector, primarily due to their high losses and low bill recoveries.

These shortcomings in power transmission and distribution are impeding the sustainable provision of energy services, resulting in elevated energy prices and amplified business costs.

During the eleven-month period, the power distribution companies (DISCOs) incurred losses and inefficiencies, along with non-recoveries of bills, contributing Rs374 billion to the circular debt, accounting for 95% of the total addition of Rs394 billion to the overall debt stock.

DISCOs’ losses and inefficiencies amounted to Rs125 billion, while low bill recoveries added Rs249 billion during July-May 2022-23.

The breakdown of circular debt additions further shows that Rs87 billion was attributed to the payment of interest to power producers on delayed payments, with the government currently owing Rs1.77 trillion to these generators.

Additionally, Rs58 billion was added to the circular debt due to interest payments to banks on the Rs765 billion parked in a power holding company.

To address this issue, the government has imposed a debt servicing surcharge of Rs3.23 per unit, passing on the cost of inefficiency to power consumers.

Furthermore, Rs171 billion was included in the circular debt due to delays in the recovery of generation costs through quarterly and monthly fuel charges adjustments. An additional Rs57 billion was added to the debt stock due to non-payment by K-Electric.

Business

There are US$13,280.5 million in foreign exchange reserves in Pakistan.

Published

3 days ago

Farwa

According to a representative for the central bank, as of April 19, 2024, the nation’s total liquid foreign reserves were valued at US$ 13,280.5 million. A loss of US$74 million left the State Bank of Pakistan’s foreign reserves at US$7,981.2 million.

Commercial banks have $5,299.3 million in reserves for Pakistan.

In the week that concluded on April 12, the State Bank of Pakistan’s (SBP) foreign exchange reserves increased by $14.4 million to $8.055 billion.

“In a weekly statement, SBP stated that it has repaid US$ 1 billion in principal and interest on Pakistan’s International Bond, which matures this week.”

But at $13.374 billion, the nation’s total reserves decreased by $68 million. In the same way, commercial banks’ reserves dropped to $5.319 billion, a reduction of $82 million.

Business

NIMA seminar to increase Pakistan’s ship recycling industry’s capacity

Published

3 days ago

Farwa

According to a release, important players from a range of maritime industries attended the conference to discuss issues facing the shipping sector.

It further stated that the symposium cleared the path for the resurgence of a sustainable future in ship recycling.

Participants in the conference included representatives of the Gadani Ship Breaking Labour Union, PSBA, KS&EW, KPT, PMSA, GEMS, and the federal and Balochistani governments.

Furthermore, global perspectives and ideas were offered by international specialists such as Rabia Razzaque from UN-ILO and Professor Raphael Baumler from the World Maritime University.

The seminar emphasized Pakistan’s capacity to emerge as a pioneer in the field of environmentally friendly ship recycling.

In order to protect the environment and the safety of employees, the participants emphasized the importance of following international standards and regulations.

During his speech, Chief Guest Senator Nisar Ahmed Khoro emphasized the importance of the maritime industry’s resurgence and the crucial necessity for coordinated efforts from all parties involved.

A new age of economic prosperity, worker safety, and environmental responsibility for Pakistan’s maritime industry was called for as he urged the stakeholders to work together on a comprehensive SENSREC program.

Vice Admiral Ahmed Saeed (Retd), the president of NIMA, emphasized the significance of environmental stewardship and safety in ship recycling procedures.

Business

Inflows into the Roshan Digital Account surged to $7.660 billion on March 24.

Published

3 days ago

Farwa

According to the data, remittance inflows for the month of March totaled US$ 182 million, whereas they were US$ 141 million in February and US$ 142 million in January 2024.

Millions of Non-Resident Pakistanis (NRPs), including those who own Non-Resident Pakistan Origin Cards (POCs), can now engage in banking, payment, and investing activities in Pakistan with the help of these accounts, which offer cutting-edge banking solutions.

According to a statement from the State Bank of Pakistan, the number of accounts registered under the program increased by 11,091 from 668,701 accounts in February 2024 to 679,792 accounts in March 2024.

As of March 2024, the central bank reported that foreign nationals of Pakistan have invested US $312 million in Naya Pakistan Certificates, US $528 million in Naya Pakistan Islamic Certificates, and US $31 million in Roshan Equity Investment.

It is important to note that former prime minister Imran Khan introduced the Roshan Digital Account initiative in September 2020 with the goal of giving Pakistanis living abroad access to digital banking services for the first time.