Circular debt dispute reaches cabinet today.

Byline: Khaleeq Kiani

ISLAMABAD -- The disagreement between two major stakeholders - the power division and the regulator - over the size of circular debt and the rate of its monthly growth has reached the scheduled meeting of the federal cabinet on Tuesday.

The controversy had erupted about two weeks ago at a meeting presided over by Prime Minister Imran Khan when the chairman of National Electric Power Regulatory Authority (Nepra) challenged the power division's data suggesting a drop in the circular debt. This put the political and bureaucratic leadership in the power sector in a hotspot.

The prime minister directed his cabinet colleagues to get to the bottom of the disputed numbers and ordered the power division and Nepra to reconcile the actual data. This was followed by a series of meetings presided over by Finance Adviser Dr Abdul Hafeez Shaikh, Planning Minister Asad Umar and Special Assistant to the Prime Minister on Petroleum Nadeem Babar but without a conclusive outcome.

Officials in the power division insist that their data presented at various forums about the recoveries was not only accurate but was also validated by third parties such as the World Bank and the International Monetary Fund (IMF). In private, they accused a mafia in the power companies of reporting incorrect numbers to Nepra after coming under pressure from the power division to check power theft and improve recoveries. The power division is also questioning the mandate of the power regulator over the circular debt.

Nepra and Power Division have different figures on size and rate of monthly accumulation of electricity data

Nepra officials, however, have a different view that raises a very serious question. They argue that the primary source of all sorts of financial data regarding the power sector was the power companies - distribution, generation, transmission and power purchasing agencies - and their managements and boards of managements were appointed by or through the power division.

Based on duly certified data from the power companies, the regulator had been determining the consumer tariff, generation tariff and wheeling tariff and all sorts of other regulatory functions in consultation with the power division in various forms. As such, if the power companies were misreporting to the regulator, the entire financial and commercial stream of the power sector becomes questionable. In that case, the third party validation from lending agencies would become...