Self improvement to political information

A finance ministry official said the size of ICCD at Rs400bn, as quoted by Water and Power Minister Raja Pervez Ashraf was not correct as the ICCD never went beyond Rs250bn.In an attempt to reduce inter-corporate circular debt (ICCD), the finance ministry released about Rs14 billion to Pakistan State Oil on Wednesday. A part of the amount would be paid to refineries and gas companies on behalf of the PSO to improve their cash flow.

The amount was arranged through at-source deductions from the accounts of defaulting companies because of unpaid electricity bills, including KESC's payables to the Pakistan Electric Power Company (Pepco).

This will significantly reduce the overall size of the debt, a finance ministry official told Dawn on Wednesday.

He said a Rs24 billion capital injection by the federal government in June had reduced the size of the ICCD by Rs106 billion through a cycle of book adjustments.

KESC's total payables stood at about Rs45 billion on January 4 against its receivables of about Rs13 billion.

Commenting on a Dawn report about the rising circular debt, the official said the size of ICCD at Rs400 billion, as quoted by Water and Power Minister Raja Pervez Ashraf in his various public appearances, was not correct. 'The ICCD never went beyond Rs250 billion even in worst of times,' he said.

He, however, said that various energy sector entities quoted their receivables and payables under different accounting procedures that created confusion about the size of the debt. For example, Pepco quoted its receivables as these stood on the date of billing but it involved a cycle of about 45 days to really materialise these bills into payment.

Likewise, the PSO or Oil and Gas Development Company quoted their receivables on the day they dispatched their oil or gas supplies to Pepco but Pepco showed them as payable when it actually received the consignments.

The official said the total receivables of Pepco stood at about Rs175 billion on Jan 4 against their payables of about Rs141 billion, leaving a gap of about Rs35 billion.

After accounting adjustments, the gross gap in the receivables and payables of Pepco would perhaps be 40 per cent lower, he clarified.

He said the finance ministry had taken effective measures to control the ICCD and Pepco had been asked to recover over Rs75 billion outstanding against private sector consumers.

He confirmed that PSO's receivables stood at Rs75 billion against its payables of about Rs60 billion.

Likewise, the receivables of OGDC against power and gas companies stood at about Rs53 billion while Pak Arab Refinery Limited owed about Rs23 billion to oil and power companies.

He said the finance ministry was closely monitoring the performance of Pepco and other energy sector companies to ensure that the ICCD did not develop again.

The recent 12 per cent increase in electricity tariff, the official said, would substantially improve cash flows of Pepco and its gap between the cost of energy generation and recovery would even out during the current quarter.

He said Pepco would not be given more than Rs55 billion as subsidy during the current year in accordance with commitment made to international lending agencies and its revenue shortfall would be bridged through recoveries, efficiency and tariff increases.

Beds Factory one stop for quality beds, mattress and Mattresses.

The amount was arranged through at-source deductions from the accounts of defaulting companies because of unpaid electricity bills, including KESC's payables to the Pakistan Electric Power Company (Pepco).

This will significantly reduce the overall size of the debt, a finance ministry official told Dawn on Wednesday.

He said a Rs24 billion capital injection by the federal government in June had reduced the size of the ICCD by Rs106 billion through a cycle of book adjustments.

KESC's total payables stood at about Rs45 billion on January 4 against its receivables of about Rs13 billion.

Commenting on a Dawn report about the rising circular debt, the official said the size of ICCD at Rs400 billion, as quoted by Water and Power Minister Raja Pervez Ashraf in his various public appearances, was not correct. 'The ICCD never went beyond Rs250 billion even in worst of times,' he said.

He, however, said that various energy sector entities quoted their receivables and payables under different accounting procedures that created confusion about the size of the debt. For example, Pepco quoted its receivables as these stood on the date of billing but it involved a cycle of about 45 days to really materialise these bills into payment.

Likewise, the PSO or Oil and Gas Development Company quoted their receivables on the day they dispatched their oil or gas supplies to Pepco but Pepco showed them as payable when it actually received the consignments.

The official said the total receivables of Pepco stood at about Rs175 billion on Jan 4 against their payables of about Rs141 billion, leaving a gap of about Rs35 billion.

After accounting adjustments, the gross gap in the receivables and payables of Pepco would perhaps be 40 per cent lower, he clarified.

He said the finance ministry had taken effective measures to control the ICCD and Pepco had been asked to recover over Rs75 billion outstanding against private sector consumers.

He confirmed that PSO's receivables stood at Rs75 billion against its payables of about Rs60 billion.

Likewise, the receivables of OGDC against power and gas companies stood at about Rs53 billion while Pak Arab Refinery Limited owed about Rs23 billion to oil and power companies.

He said the finance ministry was closely monitoring the performance of Pepco and other energy sector companies to ensure that the ICCD did not develop again.

The recent 12 per cent increase in electricity tariff, the official said, would substantially improve cash flows of Pepco and its gap between the cost of energy generation and recovery would even out during the current quarter.

He said Pepco would not be given more than Rs55 billion as subsidy during the current year in accordance with commitment made to international lending agencies and its revenue shortfall would be bridged through recoveries, efficiency and tariff increases.

Beds Factory one stop for quality