Senate panel concerned over clearance of Rs480bln circular debt sans pre-audit

ISLAMABAD: A Subcommittee of the Senate Standing Committee on Finance, Revenue, Economic Affairs, Statistics and Privatisation on Wednesday observed that holding pre-audit of the circular debt worth Rs480 billion before its clearance could have saved a hefty amount for the national exchequer.

Chaired by Mohsin Raza and attended among others by Kamil Ali Agha and representatives from the ministries of finance, water and power, Federal Board of Revenue and the State Bank of Pakistan, Raza asked the quarters concerned about the reasons of their failure to conduct pre-audit before clearing Rs480 billion circular debt in 2013.

He said the pre-audit would have been conducted just in one to three days. Mohsin said it was not understandable that why the amount was released in haste when the energy shortage was not naive to the country.

What made the government declare emergency for the clearance of this circular debt in a single day? He asked.  The finance ministry representative informed the committee that the emergency was felt because of loss to the GDP by two percent due to the energy shortage and load-shedding of 10 to 12 hours/day.

In addition, independent power producers (IPPs) had called for government guarantees and, subsequently, approached the Supreme Court, which prompted the government to resolve the issue immediately.

Raza said that at least four meetings had been conducted to sort out this particular issue, which remained inconclusive.

Following the finance committee’s decision, this subcommittee was constituted on December 1, 2016 to prepare a report on its findings on the circular debt issue, he added.

He directed all the quarters concerned to come up with proper documents during the upcoming meeting, which would likely to be held in the middle of the current month.

The committee has to submit its report by February 20 so that it would have to conclude debate on the issue before the deadline, he said.

The Federal Board of Revenue representatives informed the committee that no exemption or waiver was given to 29 IPPs registered with the FBR, adding that as per their record, the IPPs had filed their returns of Rs16 billion.

The SBP in its stance said it had to honour the cheque and they did accordingly in issuing the amount of the circular debt, while the representatives of the ministry of water and power gave details about the circular debt distribution to the committee.