Loan Payment: ECC Okays adjustment of Rs 273b in Power

Ibn-e-Ameer

The Economic Coordination Committee (ECC) on Friday approved a plan to make payment of Rs 273 billion loans in the power sector against NTDC, PAEC, Wapda Hydro Electric, and Neelum Jhelum HPP against their receivables.

The power sector had obtained loans but it is unable to make payment of these loans. Therefore, the government has made book adjustments of these loans against receivables of power sector entities.

This will result in reducing circular debt by Rs 116 billion following payment of loan against receivables of power sector entities, Energy Minister Hamad Azhar said in a tweet.

He said that Economic Coordination Committee had approved this plan in a meeting held here on Friday. He said that it would help reduce circular debt by Rs 116 billion.

Officials said that NTDC was to make payment of the principal loan and interest rate amounting to Rs 34.6 billion, Pakistan Atomic Energy Commission Rs 91.17 billion, Wapda Hydro Electric Rs 41.3 billion, and Neelum Jhelum HPP Rs 105.9 billion.

The total liabilities of relent loan in terms of unpaid principal and interest rate stands at Rs 273.2 billion as of May 30, 2021.

The government had given guarantees to mature loans for these entities. However, these entities had to receive amounts on account of circular debt.

Following approval of ECC, the government will adjust the receivables of these entities against the liabilities of loans, these entities had to pay.

Actually, this is a book adjustment, the government has done to clear the circular debt and liabilities of loans against these entities, an official said.

The circular debt in the power sector has been big trouble for all governments. Even, it is haunting the PTI government. It had increased from Rs 1.6 trillion to Rs 2.3 trillion during the tenure of the present government.

At present, the government is following different models. It had signed agreements with Independent Power Producers (IPPs) to reduce the size of circular debt and the burden of capacity payments on the consumers.

Secondly, it is working on retiring the old power plants that had low efficiency. The government is also working to improve the energy mix in the energy basket. It had set the target of increasing the energy mix of renewable from existing 4 to 30 percent in 2030 to cut the cost of energy.