Despite raising tariffs significantly, Pakistan’s power sector debt grew to Rs2.31 trillion by June 2023, up from Rs2.25 trillion in the previous fiscal year (FY22). This increase of Rs57 billion (about 3 per cent) over 12 months is quite different from FY22 when the debt actually decreased by Rs27 billion. 

Here’s a breakdown of the key points: 

1. In FY22, the debt was Rs2.25 trillion, but by June 2023, it had risen to Rs2.31 trillion. 

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2. In FY22, power producers were owed Rs1,351 billion, generation companies owed Rs101 billion to fuel suppliers, and Rs800 billion was held in Pakistan Holding Limited (PHL).  

3. In FY22-23, the debt to power producers increased to Rs1,434 billion, while the debt to PHL decreased to Rs765 billion in FY23. 

4. In FY22, some subsidies were reduced by Rs12 billion, but in FY23, there were no subsidies left. 

5. The interest charges on delayed payments by independent power producers (IPPs) increased to Rs105 billion in FY22 but dropped to Rs100 billion by the end of FY23. 

6. The markup paid on IPPs’ claims by PHL increased from Rs29 billion in FY22 to Rs43 billion in FY23. 

7. The pending generation cost, including tariff adjustments and fuel charges, decreased from Rs414 billion in FY22 to Rs250 billion in FY23. 

8. K-Electric’s outstanding dues went from Rs107 billion in FY22 to an excess payment of Rs53 billion in FY23. 

9. However, power distribution companies (Discos) saw their losses due to inefficiency rise from Rs133 billion to Rs160 billion in FY23. 

Read more: Pakistan to launch digital rupee to reduce printing and distribution costs 

In simple terms, even though the government raised tariffs to collect more money for the power sector, the debt continued to increase. This debt is owed to various power-related entities, and some subsidies and charges also changed over the years. Additionally, while some costs went down, the losses due to inefficiencies in power distribution increased.