Federal Secretary Power, Asif Hyder Shah, has said that by the end of the current fiscal year, the circular debt would be reduced by Rs. 350 billion.
While talking to ProPakistani, Secretary In-charge Power Division said that the circular debt is now accumulating to almost 27 percent of Pakistan’s total Budget Outlay. He said that the government had signed several new contracts with the power producers in the last year, due to which the circular debt would be reduced at the end of the fiscal year.
Currently, he estimated that the circular debt is around Rs. 2,280 billion, and Pakistan’s total budget outlay is Rs 8.4 trillion.
Asif Hyder said that the power sector requires major revamping, and the current government is working on long-term plans to reduce power sector losses.
He confirmed that the fuel mix needs to be changed over the years, and renewable and hydropower generation projects of up to 2,000 MW are in the pipeline. He said that the new hydro and renewable projects would ease the burden of fuel cost adjustments as the international fuel prices are going up.
Secretary power stated that the IMF conditions are hard, but the government is trying to reduce the circular debt, and it is imperative for the program agreement that maximum losses would be passed on. He said that currently, on average a unit price of electricity in Pakistan is Rs. 17.89 per kWh, whereas only 45 paise per unit is given as subsidy, while consumers are being charged Rs. 17.44 per kWh.
He acknowledged that the base tariff has been increased up to Rs. 5 per kWh and has been increased just to reduce circular debt and bridge the gap of losses incurred by power companies. He hoped that by the end of June this year, the circular debt would be reduced to Rs. 1,850 billion.