CIRCULAR DEBTS BUBBBLE IS BEING PUMPED AGAIN AT ALARMING PACE. THE unpaid bills of power companies are piling up again. The amount has already reached around 31pc of the previous outstanding bills of more than Rs500bn for the pre-June period that was cleared by the government about 10 weeks ago. This development was not unexpected. Many had warned the government that the payment of the outstanding bills of power companies and fuel suppliers alone was not enough to resolve the chronic issue of inter-corporate circular debt in the power sector. The government on priority basis learned from predecessor and take necessary measures to fully collect the power bills from the consumers, raise prices and, more importantly, check the huge power theft and minimize transmission and distribution losses. Some of its actions such as raising electricity prices are tough for any government to implement for fear of a political backlash. Thus, it is not surprising that prices are being `rationalized` selectively and after a long lag. Similarly, unpaid bills are being collected from the provinces through `at source` deduction from their share in the federal tax money, setting off criticism that the federal government is overstepping its constitutional authority. However, little movement has been made so far to stop power theft and check system losses amounting to nearly 30pc of the total annual production of electricity. These losses are causing a loss of Rs250bn and are the main reason behind the high electricity prices that consumers are being forced to pay. In fact, the government would not need to increase electricity prices if it were able to stop theft and minimise the distribution losses to internationally accepted levels. No doubt, this task is not an easy one and requires an investment of billions of rupees. But unless work is started on it soon, the challenge will become far more difficult. If these leakages are not plugged, the unpaid bills of the power companies will continue to pile up no matter how much money is injected into the system.
Posted on: Mon, 09 Sep 2013 11:11:53 +0000
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