Senate committee decries Rs321bn circular debt

WebDesk September 2, 2016 2 minutes read

ISLAMABAD: The Senate Standing Committee on Finance on Thursday decried the resurgence of circular debt despite an increase in electricity tariffs and declining oil prices on the international markets.

The committee, chaired by Saleem Mandviwalla, noted that the circular debt was around Rs480 billion in five years which was cleared in June 2013. However, since then Rs321bn has accumulated in this head. The committee questioned Ministry of Water and Power’s Additional Secretaries Zargham Eshaq Khan and Omar Rasool if the government was giving any subsidy on electricity. The two officials replied in negative.

PTI’s Mohsin Aziz pointed out that crude oil was at around $120 per barrel in 2013 and electricity rates were Rs7 per unit. “Oil is around $40 per barrel now and the power rate is Rs12 per unit. What is the reason for the resurgence of circular debt?” Senator Aziz questioned.

The committee was informed by the officials that an MoU has been signed between the government and Independent Power Producers (IPPs) to convert their fuel base from oil to coal.

Three IPPs have been granted tariff by Nepra and are establishing infrastructure in this regard, the officials informed. However, the Senate body termed the MoU one sided to favour the IPPs only.

The committee decided to hold a separate meeting over the subject and directed the ministry of water and power to bring production data of Musharraf era, PPP government and the current figures.

Earlier, the committee discussed various foreign funded projects in agriculture and livestock sectors.

Conflicting figures were received from relevant officials of Sindh and Balochistan provinces as well as Economic Affair Division (EAD) officials.

Balochistan officials said they received Rs1.86 million from the division while the EAD officers said the entire Rs52m Japanese grant has been transferred to the province. The committee was informed that another Japanese grant of Rs45m for agriculture project in Sindh was lying with EAD as the Sindh government was not coming up with any project despite repeated reminders. The committee directed both the provinces to hold separate meetings with the EAD.