A TOP power ministry official has cautioned that power supply to the residents of Karachi may face disruption if the government does not immediately pay outstanding tariff differential subsidy dues to K-Electric. That is quite disturbing. He informed the Public Accounts Committee during a briefing on Wednesday that KE consumers get Rs10-20 per unit in subsidy, which the government pays to the distribution company on behalf of its customers to keep their bills light.

These are legitimate costs that distribution companies should be paid without delay in order to enable them to recover the full price of the electricity units they sell. KE`s nine-month report for July-March says that the increase in fuel prices and nonprovision of local gas supply to it have resulted in a substantial jump in its TDS claim receivables from the government. The company`s net receivables from different government entities stand at Rs23.9bn on principal due basis after settling payables and receivables, a substantial portion of the latter being TDS.

The growing backlog of receivables means it will continue to have a significant impact on KE`s cash flow position, and affect its ability to increase the pace of investment in the power infrastructure as its net loss for the first nine months of the present fiscal year to March went up to Rs39.4bn. This compares with a profit of Rs1.5bn for the same period a year ago. The company`s losses don`t have anything to do with its receivables.

That said, the timely release of subsidies is imperative for it to sustain its investments in infrastructure and to maintain fuel inventory and production. A committee set up by the government is trying to sort out the issue of receivables and, it is hoped, that a solution will be found by the end of next month.

But the government is not justified in further delaying or stalling the outstanding TDS payments to KE where there is no dispute.