Authorities in Sindh have refused to take responsibility of the power dues piled up against local government departments – which will make it harder for the federal government to deduct heavy payables of the provinces at source from the divisible pool.
The federal government has made a demand of its own: allocate an amount in the provincial budget to pay outstanding bills against different provincial departments.
Power sector receivables have surged to Rs495 billion. Out of this total debt, Rs84.36 billion dues are pending against the provinces, of which Sindh is to pay Rs53 billion. In addition to it, Karachi Electric (KE) is to pay Rs45 billion against the 650MW power supply from NTDC.
Sources told The Express Tribune that the federal government in a meeting of Council of Common Interests (CCI) held on February 10 had proposed at source deduction of 50 per cent of the heavy payables of the provincial governments from the divisible pool but Sindh had opposed it and refused to take responsibility of local government departments. Sindh also says that the illegal connections should also be cut before placing in the mechanism of deducting power bills at source.
Officials said that provinces were responsible for the power dues against their departments and therefore they should pay. “Sindh province is not even willing to take responsibility of jails and agriculture tube wells,” officials said adding that it was socio-political issue and Sindh government should help recover the dues against different provincial departments.
The ruling PML-N government had paid Rs480 billion to clear the circular debt after coming into power. However, it had piled up again and the federal government was to receive Rs495 billion from the power consumers, including provinces. The Punjab government is to pay Rs6.2 billion, Balochistan Rs5 billion, Sindh Rs53 billion and Khyber-Pakhtunkhwa Rs2 billion. In addition, K-P had said that it would help recover outstanding dues from consumers in its province.
Punjab, Sindh and K-P had agreed in principle to deduct a minimum 50 per cent of the outstanding liabilities for deduction at source through federal adjuster to clear power bills. However, Sindh government has refused to give a final word on it.
According to sources, Finance Minister Senator Ishaq Dar chaired a meeting of provincial finance ministers on December 16, 2013 to put in place federal adjuster to deduct power bills against provinces at source.
Dar informed the provincial finance ministers that inability of provincial government departments to pay their electricity dues had resulted in cash flow problems of power distribution companies and even power producers and fuel suppliers were finding it difficult to run the business.
He said, therefore, it was very important that provincial governments should pay their electricity bills without delay.
Adviser to Sindh Chief Minister on Finance Murad Ali Shah highlighted the issue of illegal connections and clarified that due to huge number of illegal connections, the government of Sindh was not in a position to identify the exact profile or quantum of outstanding liabilities, unless such illegal connections were disconnected.
Published in The Express Tribune, March 2nd, 2014.