ISLAMABAD - The deficient tariff determination of the National Electric Power Regulatory Authority (NEPRA) and arrears against the provinces/regions are the main cause of circular debt and it is difficult to control the power sector’s debt unless 100 percent recovery is made, says the Ministry of Water and Power.

The Nepra’s determination of tariff is deficient which does not meet the cost of generation and that in turn was contributing to increasing circular debt, said Water and Power Secretary Yunus Dagha while briefing the Senate Subcommittee on Water and Power. The meeting was chaired by Senator Nauman Wazir.

While coming hard on Nepra, Dagha said that so far due to the regulatory body’s deficient tariff, Rs150 billion have been added to the country’s power circular debt. The Nepra wants to bill the power consumers on the line of California-like system, which is impossible in Pakistan, he added. Had the Nepra given factual and efficient tariff, there would have been no issue of circular debt, he added.

Besides, Nepra deficient tariff, he said that unless the 100 percent recovery from power consumers is made, the government shall not be able to fully get control over circular debt issue. He also said that non-payment of dues by the Balochistan government; Federally Administered Tribal Areas (FATA) and Azad Jammu and Kashmir (AJ&J) were also one of the reasons in increasing circular debt. Regarding power arrears, he said that Balochistan has to pay Rs106 billion, AJK Rs75 billion and FATA has to pay Rs29 billion to the federal government.

The Water and Power secretary said that the Ministry of Water and Power on his part has been making and made strong efforts to streamline the system, controlling leakages from the system and proper utilisation of resources and saved Rs116 billion. He further said that for the first time in country’s history the distribution companies’ losses have been brought down to 17.9 percent from earlier 20 percent.

The committee also expressed serious concern over the government’s failure in implementation of the ‘energy mix planning’ project that was with the Planning Commission for the last four years. The official of the ministry replied that the project is under process and in next six months it will be finalised.

Regarding Nandipur Power Plant, the committee observed that it seems that the ministry of law and justice (during the previous government) was responsible for delay in completion of the Plant, its cost overrun and inability to generate power from it with full capacity.

The project file remained unattended with the ministry of law and justice for almost four years, but after the Supreme Court’s directive it was moved for further action. The committee said that for the loss of around Rs113 billion in Nandipur power plants, the then law minister and law secretary was responsible.

Nauman Wazir termed four-year delay in completion of Nandipur power plant as ‘criminal’ which increased the cost of the project. The committee also called Senator Babar Awan and the then law secretary in the next meeting of the committee to be held on March 20. It should be asked from them that why they toll four long years on giving legal advice on the project, senator Wazir said.

The committee chairman said that the Independent Power Producers Advisory Council (IPPAC) claim that the circular debt is Rs414 billion, the secretary termed their claim as untrue and said it is around Rs393 billion. The advertisements appeared in national dailies by the IPPs was bringing a bad name for the country. The project director of 969 megawatts Neelum-Jhelum Hydropower Project informed that 91 percent work on the project has been completed.

One unit, 240MWs of power of the NJHP will start generating in February 2018. Due to delay, the civil work of Rs90 billion has been increased to Rs165 billion.