ECC approves plan to settle Rs80bln power sector’s circular debt

ISLAMABAD: Government on Wednesday approved a plan to obtain Rs80 billion of a bank loan to retire part of the longstanding power sector’s circular debt.

The decision was taken at a meeting of the Economic Coordination Committee of the cabinet, headed by Prime Minister Shahid Khaqan Abbasi.

The power division submitted a proposal to overcome the monster of rising circular debt ahead of the elections, an official said. “Without the injection of Rs80 billion, it would not be possible to ensure load shedding-free Ramazan.”

Ministry of finance estimated power sector’s circular debt at Rs472.678 billion as of November 2017. Government entities owed around Rs90 billion to PSO, while independent power producers (IPPs) had to be paid around Rs288 billion, the ministry said in a report to the parliament last week.

ECC approved a plan to settle power sector payables that will ensure that government-owned companies including Pakistan State Oil (PSO), Sui Southern Gas Company (SSGC), Sui Northern Gas Pipelines Limited (SNGPL), generation companies, distribution companies and nuclear power plants continue to operate normally.

“The government will also settle outstanding dues of IPPs after reconciliation and pre-audit in the prescribed manner to ensure transparency,” a government statement said.

ECC also approved issuance of government sovereign guarantee against financing facility of Rs13.132 billion from local banks for evacuation of power from 1,320 megawatts imported coal power plant in Hub. The committee also approved procurement target of 6.1 million tons of wheat for 2017/18.

ECC approved salaries for the employees of Pakistan Steel Mills Corporation for three-month (October to December 2017). The committee approved a proposal to link price of JP-8 petroleum product with ex-refinery price of JP-1, which will increase its price in the range of Rs1.42/litre, the official said.

It approved signing of headquarter agreement between government and South Asian Association for Regional Cooperation’s arbitration council (SARCO) for exemption from duties and taxes to SARCO and its officials.ECC reviewed progress into its earlier decision of directing Trading Corporation of Pakistan to procure 300,000 tons of sugar from millers.

“It was reiterated during the meeting that the decision was taken by the forum to facilitate sugar mills for timey procurement of sugarcane and to ensure payments to the farmers at prescribed rates,” the statement added. “The meeting was informed that no bid was received against the TCP tender for procurement of sugar at Rs48/kilogram.” Meanwhile, the Executive Committee of the National Economic Council (Ecnec), in a meeting headed by Prime Minister Abbasi, approved Rs80.13 billion worth of infrastructure projects.

The council approved upgradation and extension of National Transmission and Despatch Company’s telecommunication and supervisory control and data acquisition’s system at a total cost of Rs11.638 billion.

Ecnec also approved construction of 18.9 kilometres long northern bypass of Dera Ghazi Khan at a total cost of Rs4.874 billion. The council authorised improvement and widening of 153km Chitral–Boomi–Mastuj–Shandur road at a cost of Rs16.755 billion.

The council approved construction, land acquisition, compensation to affected properties and relocation of utilities for Dualisation of Rawalpindi-Kahuta road of 28.4km, including four-lane bridge over Sihala railway pass, Sihala and Kahuta bypass at a cost of Rs13.012 billion.

Ecnec approved Rs8.379 billion for construction of Ziarat Mor-Kach-Harani road of 107.2km and Harnai-Sanjavi road of 55.1km.

The council approved land acquisition, compensation for affected properties and relocation of utilities for 120.12km Karokoram highway phase-1 (Havelian-Thakot) project at a cost of Rs12.606 billion. The project is a part of China-Pakistan Economic Corridor. The council also approved southern Punjab poverty alleviation project worth Rs7.565 billion.