Circular Debt Dropped by Rs189 bn in 10 Months: Asad Umar

Federal Minister for Planning and Development Asad Umar said that the circular debt has recorded a major drop of Rs189 billion during the first 10 months of this fiscal year, showing a positive progress as compared to last year.

The circular debt report of April 2021 was submitted by the power division in the cabinet committee meeting on energy chaired by the federal minister.

Taking to his Twitter handle, Asad Umar briefly described the reasons that helped to control circular debt by a wide margin.

Circular debt build up jul-apr this fiscal year is 260 billion vs 449 billion same period last year, a reduction of 189 billion. The full year circular debt build up this year is expected to be more than 100 billion LESS than the circular debt build in pmln last year of govt!

— Asad Umar (@Asad_Umar) May 25, 2021

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Breakdown of Rs260 billion circular debut

The statistics show the circular debt details, where an amount of Rs 28 billion is on account of unpaid subsidies, Rs 74 billion is for unbudgeted subsidies, Rs 61 billion is for interest charge on delayed payment of Independent Power Producers (IPPs).

Moreover, Rs 29 billion for Power Holding Limited (PHL) mark-up, Rs 60 billion for pending generation cost, Rs 61 billion non-payment by K-Electric, and Rs21 billion losses of distribution companies.

In regards to it, a comprehensive circular debt reduction program has been initiated by the government to improve the viability of the power sector and arrest the accumulation of arrears.

Umar credited the efforts of the ruling government for “huge improvement” in the circular debt build-up as compared to the last year of the Pakistan Muslim League-Nawaz (PML-N) government.

This huge improvement in the circular debt build vs last year of PMLn govt has been achieved despite massive increase in capacity payments caused by decisions committed by pml govt. PMIK govt improving performance and clearing mess inherited from PMLn in every sector

— Asad Umar (@Asad_Umar) May 25, 2021

Asad Umar appreciated the improvement in circular debt management during the first 10 months of the current fiscal year.

The minister opined that better communication between finance and power divisions could help to bring massive improvements in the system.

This improvement in energy sector performance and slow down in build up of circular debt has been the result of sustained hard work, analytical data based decision making and willingness to break the nexus between decision makers and powerful elite

— Asad Umar (@Asad_Umar) May 25, 2021