Monster of Rs2.6tr circular debt will stay despite levying of Rs3.23/unit surcharge.

ISLAMABAD -- National Electric Power Regulatory Authority (Nepra) Chairman Tauseef H Farooqi Thursday noted that the levying of Rs3.23 per unit surcharge would only pay off the interest on the power sector loan, while the monster of Rs 2.6 trillion circular debt will stay.

Despite finalising circular debt management plan, the Power Division was unable in a NEPRA hearing to give a clear cut mechanism for circular debt reduction from the existing Rs2.6 trillion, removal of Discos inefficiencies and losses reduction. The Nepra on Thursday conducted public hearing to consider petition of the federal government to increase rate of power surcharge on the consumers. The federal government had submitted a new petition to Nepra relating to hike in power surcharge from Rs 1.43 to Rs 3.23 per unit for the next financial year.

In a petition, the federal government said that the previously approved power surcharge could not meet the requirement to pay off interest on circular debt. During hearing, it was informed that Rs 3.23 per unit surcharge will continue beyond the next financial year,till the circular debt is cleared.

Chairman Nepra asked that whether surcharge will only cover mark up or it will reduce the principal amount as well?

Officials of Power Division were unable to provide a clear cut plan for circular debt reduction. The Power Division came under fire by officials of Nepra and consumers over seeking increase in rate of power surcharge from the next financial year to pay off interest on circular debt and losses of the power distribution companies.

Nepra has already allowed the government to recover Rs 1.43 per unit surcharge from the power consumers from the next financial year. However, the government in a petition said that it was not enough to meet requirement and requested an increase of Rs 1.80 per unit to Rs 3.23 per unit on the electricity consumers from the next year to pay off debt and cost of power theft of inefficient power companies. The federal government had requested to impose Rs 3.23 per unit surcharge on permanent basis from the next financial year.

The increase in surcharge rate will result in passing on Rs 335 billion burden on electricity consumers across the country. 'How far will this matter go, Member Nepra-Khyber Pakhtunkhwa Maqsood Anwar questioned. Why is it so early for next year's power surcharge, Chairman Nepra question and pleaded the federal government representatives 'let the people breathe a sigh of relief.

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