Six hours a day loadshedding plan under threat

ISAMABAD: The Nawaz government has carved out a loadshedding plan of maximum six hours a day during Ramazan but it is most likely to fizzle out as receivables of the power sector have further surged to a whopping Rs520 billion.
On top of it, circular debt has risen to over Rs330 billion further multiplying the financial miseries of the government. The ministry has chalked out a plan under which in urban areas loadshedding duration will be up to five hours and in rural area seven hours so that the people may not face difficulties while they are fasting. But this plan seems a mission impossible keeping in view the fiscal constraints that have further swelled, a senior official confided to The News.

Pakistan State Oil (PSO), the official said, is demanding immediate release of Rs100 billion in the first week of July for smooth and uninterrupted fuel supply to thermal power houses for maximum electricity generation, but the Finance Ministry is going to release Rs40 billion on Monday out of which Secretary Water and Power is likely to give Rs15 billion to IPPs and Rs25 billion to PSO.

Out of Rs330 billion, IPPs want to be paid Rs115 billion, but they are being given just Rs15 billion. IPPs are currently generating 1700-1800 MW less electricity because of their financial constraints and with release of Rs15 billion, they are not going to increase their generation. The source said that some of the IPPs have already issued notices to Ministry of Water and Power seeking to invoke sovereign guarantees.

And the PSO that needs Rs100 billion will be paid Rs 25 billion which is just one quarter and will not enable the state owned oil marketing company to ensure incessant fuel supply of 22,000 tons per day which is mandatory for required increase in electricity generation.

The government plans to keep electricity generation at over 16,000 MW per day in the month of Ramazan. The PSO is facing high magnitude of financial constraints owing to which it is feared to default on Rs53 billion L/C in the month of July.

The official said that if Ministry of Water and Power wants the supply of 22000 tons of furnace oil per day for running all thermal power houses, then the PSO needs Rs50 billion more.So much so the receivables of PSO’s have skyrocketed to over Rs80 billion with payables of Rs95 billion.

It may not be out of place to mention that for the first time PSO defaulted on Rs26 billion L/C in the month of May this year owing to which it has lost its credibility before the international suppliers and banks. To a question, the official said that in the month of July, Rs70 billion L/C and in August Rs82 billion L/C will mature and need to be paid.

The PSO is currently providing 18,000-20,000 tones daily to power houses and the ministry wants the increase of fuel supply to 22000 tons per day in the months of Ramazan. The fuel stocks of power houses have depleted and left only for 4 days consumption. Now, the official said that PSO has been asked to build the fuel stock for 10 days consumption at least but again the question arises where is required liquidity PSO has?

The official also said PSO is no more in a position to provide 22,000 tones fuel a day on credit and the government will have to come up with Rs100 billion at least to off load some of the organisation’s liabilities.

The Ministry of Water and Power, however, said on Sunday the government had already approved maximum electricity generation during Ramazan and the same has been lined up by the ministry by taking all necessary steps.

The government has also approved necessary funds for enhanced generation during these days, a press release issued by the ministry said on Sunday.“Better generation from hydel, thermal power plants, addition of new plants like Uch II, Guddu will reduce load shedding during Ramazan. Oil supplies have also been enhanced and their stocks are being built at different points. Fuel stocks at various power plants combined with continued daily fuel supply has been planned to ensure smooth operation of the power plants during Ramzan,” the ministry said.

“To tightly monitor the load management plan, the Ministry of Water and Power under Secretary, MS. Nargis Sethi and all Distribution Companies Chief along with their officers at their headquarter will remain open during Sehar and Iftar in Ramzan, beside their daily routine times. They will remain on Video Link during these hours. Each DISCO and the Ministry has installed dedicated landline and mobile numbers at their respective controls centers so that in case any fault occurs it can be rectified on fast tract basis.”

The release said at distribution level, down the line duties of the staff have been assigned, necessary equipment and their replacements have been arranged so that prompt action can be taken in case of technical faults.

“Due to transmission system constraints, there exists demand and supply gap. The ministry is making all-out efforts to reduce the loadshedding during Ramazan. The consumers are also requested to curtail their usage of electricity so that maximum number of people can get power supply.”

Militants plan to march on Baghdad: SITE monitors

WASHINGTON: Militants who have seized a large swathe of northern and north-central Iraq now plan to march on the capital Baghdad, a US-based monitoring group said Wednesday.

In a lightning offensive, militants seized Tikrit earlier, its latest success following a spectacular assault late Monday on Mosul, a city of two million.

The militants´ advances have forced as many as half a million people to flee their homes.

ISIL spokesman Abu Mohammed al-Adnani promised that the battle would "rage" on Baghdad and Karbala, a city southwest of the capital, the SITE Intelligence Group said.

"Do not relent against your enemy... The battle is not yet raging, but it will rage in Baghdad and Karbala," Adnani said, according to a SITE translation of an audio statement released on the militants´ Twitter feed. "Put on your belts and get ready."

Adnani also dismissed President Nuri al-Maliki as woefully incompetent. "What have you done to your people, O foolish one. No one is more foolish than you but those who accept you as the president and commander," Adnani said in the translated statement.

"What do you know about policy, leadership, and military command? You lost a historic opportunity for your people to control Iraq, and the people will always curse you for as long as they live. Indeed, there is between us and you a balance to be made even." (AFP)

RBS draws up rescue plan for Ulster Bank: report

LONDON: Part-nationalised Royal Bank of Scotland is working on a plan to salvage its troubled Irish business, Ulster Bank, by merging it with a number of rivals, the Sunday Times newspaper reported.
Attempts to find a buyer for the business have failed and a team inside RBS is looking at tie-ups between Ulster and other lenders, such as Permanent TSB or the Irish units of Danske Bank or KBC, the newspaper reported.
Bolting the institutions together could allow the new Ulster Bank to strip out costs and mount a credible challenge to Ireland's top players.
Ireland's finance minister Michael Noonan said on Saturday he would like a "significant" new bank with a big balance sheet to enter its lending market this year to drive competition in the diminished sector.
Noonan said on Sunday that he was looking at the possibility of overseas banks partnering with Irish lenders to create a competitor to the country's biggest lenders - Allied Irish Bank and Bank of Ireland.
"I'm sending a signal out to the European banking system that a growing economy in Ireland has space for more banking activity and we would welcome their participation in Ireland by way of subsidiaries or by way of going into partnership with some of our domestic banks," he told national broadcaster RTE.
Ulster Bank has racked up losses of 2.5 billion pounds ($4.2 billion) over the past two years. It accounts for less than 4 percent of RBS's assets but was responsible for 20 percent of its bad debt charges last year.
Ulster is the biggest bank in Northern Ireland and the third biggest in the Republic of Ireland.
RBS Chief Executive Ross McEwan said on Friday that he wanted to develop Ulster as a challenger to Ireland's biggest two lenders. McEwan was speaking after RBS reported a 2013 loss of 8.2 billion pounds.
The Sunday Times said RBS is in talks with a handful of private equity firms about providing tens of millions of pounds in backing for the venture.