Rs 90b needed to generate extra power during January

extra power during JanuaryISLAMABAD: The government, which is grappling in the dark for the last few months because of its failure to find a solution to the current energy crisis, was shocked on Monday when the Water and Power Ministry said that a hefty sum of Rs 90 billion was required to generate 10,000 megawatts of power for uninterrupted supply during the month-long canal closure period.

An official source said the information was provided to a meeting of the energy committee chaired by the prime minister to review the contingency plan for power generation during the canal closure period.The required sum also included receivables from the government’s departments and subsidy for the month to be paid in advance to keep thermal power generation at optimal levels. The canal closure period has cost 3,700MW to the system, which requires an estimated 11,000MW of supply. The ministry said that because of the failure to pass FPA and increase in power tariff, Rs 700 million per day were piling up in government liabilities, the source said.

The meeting directed the ministry to speed up recoveries, but estimated that Rs 45 billion was still required even if dues and subsidy were cleared. However, the Finance Ministry contested the figure and finally it was decided that officials of both ministries would meet to finalise the final sum required. The source said the estimated subsidy amount of Rs 50 billion set for the current fiscal year was consumed during the first half of the year. The Finance Ministry has paid Rs 48 billion in power subsidy during the first half of the current fiscal year. The meeting was told that the power sector receivables had swelled to Rs 370 billion, with the inclusion of Rs 70 billion in dues from not being able to pass on fuel price adjustment to the consumers.

The non-clearance of Rs 150 billion outstanding dues of Independent Power Producers (IPP) was also slowing down power generation as they were facing problems in getting credit lines from banks for daily fuel purchases. The Finance Ministry said it was working on debt swap to pick up liabilities of the IPPs from banks to make possible provision of new credit lines to them. According to a press release, Prime Minister Yousaf Raza Gilani told the energy committee comprising the finance minister, water and power minister, petroleum minister, the State Bank governor and the Planning Commission deputy chairman to formulate a programme to minimise load shedding and maximise production of electricity during the canal closure period.

It was decided that steps would be taken to utilise existing thermal generation capacity with focus on more efficient plants to reduce the cost of production and consequently reduce the burden on consumers. It was also decided to adopt efficient load management to ensure load shedding, which was necessary, and manage its schedule in a way that the consumers had predictability and were not impacted adversely by unannounced load shedding. It was also decided that steps would be taken to ensure timely fuel supply to the power plants so that electricity production remained operational according to this plan for January.

The finance minister briefed the meeting on the debt swap being undertaken for the power sector entities to deal with the circular debt issue, and the prime minister directed government power sector companies to make additional efforts to recover the receivables to help address the circular debt issue. – PT