The Finance Division has refused to allocate Public Sector Development Programme (PSDP) funds this fiscal year for reducing loans in the power sector, advising the Power Division to rework its proposal amid tight fiscal constraints, The Express Tribune reported.
During a recent meeting of the Economic Coordination Committee (ECC), the Power Division said loan adjustments required authorisation from the Ministry of Planning and argued that PSDP allocation — specifically as a non-cash adjustment — was necessary for reducing the loan portion. However, the Finance Division cited limited PSDP fiscal space and suggested resubmitting the proposal after consultations with the Economic Affairs Division and the Planning Ministry.
The ECC noted that matters related to the power and petroleum sectors should be channelled through the Cabinet Committee on Energy for more effective resolution.
The committee was informed that the Pakistan Atomic Energy Commission (PAEC) and government-owned power plants (GPPs) had already agreed to waive, abandon and relinquish all rights and claims of late payment interest as of December 31, 2024 under a rationalisation and potential tariff reduction arrangement.Â
The Task Force on Implementing Structural Reforms in the Power Sector had conducted detailed analysis on lowering tariffs for nuclear power plants (NPPs), concluding with negotiated Memoranda of Understanding (MoUs).
Under the agreed framework, power purchasers will pay outstanding dues amounting to Rs340.9 billion as of December 31, 2024, while delayed payment charges from January 1, 2025, will be revised to three-month Kibor plus 1 per cent. Similar agreements were reached with three GPPs — Haveli Bahadur Shah, Balloki and Quaid-e-Azam Thermal Power Plant — which also agreed to waive late payment interest up to December 31, 2024.
The ECC was told that Rs614.92 billion had already been disbursed to GPPs, including nuclear plants, while outstanding liabilities stood at Rs140 billion as of July 31, 2025. Future payments will be made using the circular debt financing facility. The Central Power Purchasing Agency–Guarantee (CPPA-G) has also been authorised to use part of the facility to retire Power Holding Limited’s (PHL) debt obligations amounting to Rs683.253 billion.
With the negotiated waivers, Clause (i) of the cabinet’s March 19, 2025 decision will now reflect a revised late payment interest amount of Rs116.83 billion, replacing the earlier Rs87.58 billion.
The ECC was requested to approve the MoUs with commercial banks and authorise CPPA-G to execute settlement agreements, amend contracts with PAEC, and standardise legal modifications. Approval was also sought for CPPA-G to clear GPP liabilities through the circular debt facility and for PAEC to file necessary petitions before Nepra based on the agreed tariff adjustments.
After reviewing the summary on Rationalisation of LPI and Potential Tariff Reduction for Nuclear Power Plants, the ECC approved the proposals and directed that all power and petroleum sector matters be routed through the Cabinet Committee on Energy for coordinated policy decisions.
