The government’s claims of controlling revolving loans have been exposed. In the last two years of the PTI government, there has been an increase of Rs 1139 billion, as a result of which revolving loans have reached to Rs 2300 billion.
This was disclosed at a meeting of the Public Accounts Committee chaired by Rana Tanveer Hussain. The Secretary Energy informed the committee that the revolving credit has increased by Rs 116 billion in the last three months.
In the first half of 2019, the revolving debt increased by Rs 288 billion, in the second half by Rs 198 billion. In the first half of the financial year 2020, the revolving debt increased by Rs 243 billion and in the second half by Rs 294 billion.
What is a revolving loan?
In the energy sector, revolving credit means that the amount of electricity that is being generated and sold is not being recovered.
Power theft in Pakistan, old and rotten power transmission system and poor performance of distribution companies are the reasons why the cost of power generation is not being met.
Most of the electricity in Pakistan is being generated by private sector power plants which are bought by the government and supplied to the consumers through various distribution companies including ISCO, LESCO and K-Electric. Therefore, it becomes difficult to pay the power plants and the circular debt or revolving debt increases.
If the power plants do not get the money, then they cannot pay the other furnace oil importing companies including PSO and then the oil companies. She doesn’t have money and can’t buy oil from abroad.
If the cost of electricity and the revenue from bills are low, then one or the other will make up the difference, while the debt keeps growing.
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