Islamabad: The government will be borrowing an additional Rs55b from commercial banks to pay off the outstanding dues of IPPs and Pakistan State Oil (PSO).
The nightmare of circular debt keeps raging on as it is said to have crossed Rs400b and has made it difficult for IPPs to continue operating in light of the liquidity crunch being faced.
A few months ago, IPPs had initiated press advertisements during ex-PM Nawaz Sharif’s tenure a few months ago to highlight the issues they were facing. On request of the authorities, the IPPs ended this campaign and told them that a summary will be forwarded to the Economic Coordination Committee (ECC) for the approval to obtain a Rs55b loan from commercial banks in respect to circular debt.
Since the ex-PM ended up being disqualified by the Supreme Court and his cabinet disbanded, sources said that the new cabinet along with new PM Shahid Khaqan Abbasi which was sworn in last week has taken up this case.
A summary of Rs55b loan to be obtained from commercial bank will be sent to the ECC, which is expected to approve it very soon.
Out of this Rs55b, Rs10b to Rs15b will be given to PSO and the remainder will go to the IPPs.
PSO is owed around Rs285b by various entities out of which GENCO’s owe 134b, Rs68b by Hub Power Company Limited (HPCL), Rs34.4b by Kot Addu Power Company (KAPCO) and Rs5.9b by Wapda Power Private Organization (WPPO).
PIA owes the state-owned oil giant Rs 15.6b, Rs4.2b by Sui-Northern Gas Pipelines.
PSO outstanding payables amount to Rs65.6b to Kuwait and Qatar for oil and LNG exports respectively, and Rs12.7b are owed to local refineries.
It was reported that relevant stakeholders in the power industry on Wednesday were directed by PM Shahid Khaqan Abbasi to investigate the reasons for the distribution and technical losses that were affecting the power sector.
In a meeting chaired by the PM, which was also attended by the Finance Minister Ishaq Dar and Petroleum Minister Jam Kamal Khan, he had asked the officials to formulate a strategy for reducing the circular debt in the energy supply chain which was crippling the power sector.
Both the power and finance divisions were instructed to work in tandem on improving efficiencies affecting the power sector and devise out of the box strategy to fix this issue, said the PM then.