ISLAMABAD: The Economic Coordination Committee (ECC) on Friday gave their nod to important revisions to the Oil and Gas Regulatory Authority (Ogra) Ordinance 2002 to rein in the rising circular debt in the liquefied natural gas (LNG) sector.
These revisions in the Ogra Ordinance 2002 would be applicable to the entire LNG/RLNG supply chain and eliminate inconsistencies in the dispatch, billing and receipt of RLNG volumes, reported Express Tribune.
Presently, the bill payment cycle for the power sector stands at one month and power purchasers are directed to make all payments within the specified time-period to independent power producers.
But opposed to the power sector, the stipulated payment period for LNG-fired powered plants stands at 10 days.
Because of preference of payments to LNG power plants, other plants have been confronted with liquidity crunch, said Ministry of Energy officials.
The ECC also gave go-ahead to exemption from regulatory duty on import of dry fruits, vegetables and fresh fruits from Afghanistan which was proclaimed by PM Abbasi on his visit to Kabul recently.
Last week, it was reported the power sector’s circular debt was ballooning and Pakistan’s financial system was facing severe risk as the finance ministry rejected demands to extend budgetary support.
This was disclosed by sources close to the finance secretary.
Power Division, Secretary Yousaf Naseem Khokhar said circular debt in the power sector stood at Rs570 billion in April besides the Rs452.33 billion parked in PHPL, crossing Rs1.02233 trillion.
The Prime Minister Shahid Khaqan Abbasi said this was an exacerbating situation and the gigantic amount of circular debt would make it impossible to operate the financial system of Pakistan while chairing a meeting of the Economic Coordination Committee (ECC) of the cabinet.
The Rs1.02233 trillion circular debt is beside the payment of Rs480 billion made to power sector companies, PSO and gas companies when the incumbent government took power in June 2013.
In a meeting of the ECC held on April 26th, the power division moved a summary seeking the release of funds which hadn’t been disbursed including payment of Rs14 billion against Azad Jammu and Kashmir (AJK) for subsidies, settlement of Rs14 billion because of FTA GST.
The Finance Ministry which had already released budgetary support of Rs20 billion is subject to adjustment later as it doesn’t have any fiscal space for giving assistance to the power sector under budgetary support head.
