The government owes a staggering amount of Rs220 billion — equal to 0.75 per cent of the nation’s gross domestic product — to private power producers.
This amount is part of the inter-corporate ‘circular’ debt of the power sector which the government re-accumulated over the last 13 months.
In a letter sent to Prime Minister Nawaz Sharif, the Independent Power Producers Advisory Committee pointed out that continuous ‘default’ of their ‘audited and undisputed’ unpaid bills has created liquidity crunch and they are unable to pay back the amount to banks and fuel suppliers.
“Resultantly, such payment defaults are making it impossible for IPPs to continue producing electricity at their full capacities, which will only intensify the existing electricity crisis,” the letter argues.
The government had cleared the unpaid bills amounting to Rs480bn of the power sector at the end of June 2013, pledging not to let it pile up again.
The exact current size of the debt is unknown, but some in the power industry estimate it to have grown to Rs300bn yet again.
