The federal government yesterday, refused to allocate about Rs300 billion in the budget to pay off the debt on account of leakages and reduced recovery of bills.
The government would only pay subsidies to cover the difference between cost of power generation and the tariff charged from consumers while for clearing circular debt on account of leakages and lower recoveries the Ministry of Water and Power would have to make extra efforts, said Finance Minister Ishaq Dar while speaking at the inaugural meeting of the Senate Standing Committee on Finance and Revenue that was convened to discuss the budget for 2014-15.
Committee Chairperson Senator Nasreen Jalil of the MQM pointed out that since the government did not set aside any budget for clearing circular debt, it seemed that it wanted to recover the money from people.
The government has already begun the process of recovering circular debt from electricity consumers. In the first phase, the Ministry of Water and Power will take Rs31 billion in loans from banks to retire the debt and recover the principal amount and interest charges from the consumers through electricity bills.
