ISLAMABAD: The Economic Coordination Committee (ECC) on Thursday gave go-ahead to obtaining Rs50 billion loan from commercial banks for paying off the circular debt in the power sector.
During the last two months, the outgoing government’s borrowings have touched Rs230 billion for liquidity management purposes, reported Express Tribune.
A meeting of the ECC held on Thursday and chaired by Prime Minister Shahid Khaqan Abbasi gave go-ahead to Rs50 billion borrowing as syndicated term finance facility through Power Holdings Private Limited (PHPL).
And the ECC agreed to approve a levy of a debt imposition surcharge on power consumers amounting in the range between Rs1.15 to Rs1.75 per unit to recover the cost of loans procured parked in PHPL, which would touch Rs730 billion after this latest loan.
The outgoing government has inserted Rs230 billion into the power sector in the last two months to ensure power plants remain operational as general election loom ahead.
Cost of servicing the bank loans obtained by the government for retiring the circular debt will be borne by the consumers and the latest Rs50 billion loan would lead to levying of another surcharge of 55 paisa per unit depending on the go-ahead from National Electric Power Regulatory Authority (Nepra).
Since March 2018, this marks the third instance the government has contracted a bank loan to retire the circular debt, which crossed the Rs1 trillion-mark last month including money parked in PHPL.
The government had given go-ahead to the borrowing of Rs80 billion commercial loans in March this year via PHPL and the amount had already been released.
But, Ministry of Finance hasn’t adjusted Rs14 billion subsidies of Azad Jammu and Kashmir (AJK) against savings of the same amount from the FATA general sales tax.
Then, in April the government contracted another $100 billion loan from commercial banks for decreasing the circular debt.
Out of it, Rs50 billion has been released and Rs30 billion would be disbursed soon, Power Division informed the ECC.
The ECC gave go-ahead to a summary tabled by the Power Division which sought regularization of Rs1.01 billion, the government is ought to pay to a consortium of commercial banks in order to persuade them to give fresh Rs50 billion in loans.
In this regard, the banks had claimed for settlement of overdue principal of Rs1.1 billion before being given a fresh loan facility.
