Rs40bn released to reduce loadshedding

ISLAMABAD: The government released Rs40 billion to the power companies and Pakistan State Oil (PSO) on Monday to ensure reduction in the duration of loadshedding. A finance ministry official said with the disbursement on the last day of fiscal year 2013-14, the power sector subsidies had reached Rs292 billion – Rs40bn more than Rs252bn allocated in the budget, but the subsidy target had been revised to Rs292bn under supplementary grants. Of the amount released on Monday, Rs23bn was provided to PSO to improve its cash flows and enable it to retire letters of credit due to international oil suppliers. PSO has been given Rs36bn during June as Rs13bn was disbursed early in the month. The remaining Rs17bn has been provided to power companies for payments to the banking sector of interest for the last quarter of the fiscal year. The disbursements were approved by the prime minister who had instructed the relevant quarters to ensure uninterrupted power supply during Sehr, Iftar and Taraveeh and avoid unannounced loadshedding during Ramazan. A PSO official, however, said the disbursement would settle outstanding international liabilities but the company required at least Rs70bn more to build an inventory necessary for a smooth supply chain, although that too would be quite short of mandatory stocks. He said PSO’s receivables from the power sector were Rs170-175bn. Another official said the power sector receivables from consumers had swelled to Rs520bn even though the recovery had slightly improved in recent weeks. The recoveries were significantly less than the electricity supplied by the distribution companies. A power ministry official said that while weather conditions were getting favourable as demand declined, it had set a target of capping loadshedding in urban areas at five hours and in rural area at seven hours a day. He said the generation companies were producing 14,500MW to a maximum of 15,000MW with a shortfall of 4,300-4,500MW, resulting in an average of up to nine hours of loadshedding. Published in Dawn, July 1st, 2014