ECC allows Rs36bln financing for circular debt

ISLAMABAD: Government on Monday allowed the ministry of energy to secure around Rs36 billion from a syndicate of banks to defray power sector’s outstanding payments that reawakened the energy woes.

Finance Minister Asad Umar took the decision at a meeting of the Economic Coordination Committee (ECC) of the Cabinet. “The ECC considered and approved the proposal of the ministry of energy (power division) for raising fresh financing of Rs35.806 billion through a syndicate of banks for PHPL (Power Holding Private Limited),” the finance ministry said in a statement.

The infamous circular debt, involving the whole energy sector’s chain, swelled to nearly one trillion rupees till July-end. The circular debt stood at Rs596 billion, while another Rs582 billion has been parked into the PHPL under the syndicated term finance facility. PHPL would recover the cost of loans through surcharges to be slapped on consumers through electricity bills.

The previous government settled Rs480 billion in circular debts immediately after assuming the helm of affairs.The Secretary Petroleum Division briefed the ECC about the gas supply situation on Sui Southern Gas Company Limited (SSGCL) network. The ECC was informed that the supply of gas to zero-rated industry under SSGCL system, covering Sindh and Balochistan, would continue during the winter season, in accordance with recently approved gas supply priority for the sector. The committee directed the SSGCL management to withdraw the gas load management notices issued to these industries.

“Likewise, there would be no gas load management for domestic consumers,” the finance ministry cited the ECC’s decision as stating. On another proposal of the ministry of energy (petroleum division), the ECC approved provision of 12 million metric cubic feet/day gas (mmcfd) to Sui Northern Gas Pipelines Limited from Dhok Hussain gas field in Sayyab in Khyber Pakhtunkhwa and also accorded approval for provision of 10 mmcfd gas to SSGCL from Bitrism gas field in district Sanghar.

Chairman Pakistan International Airlines (PIAC) briefed the meeting about current operational and financial position of the organisation. The ECC directed the management to improve the business model of the company and to devise a strategic plan for solution to its financial and administrative problems on long-term basis.

The committee approved a proposal for issuance of government guarantees of raising Rs17.022 billion to meet the immediate financial requirements of PIAC. Secretary Ministry of Maritime Affairs briefed the meeting regarding the working of the liquefied natural gas terminals at Port Qasim and the associated administrative and financial issues. The ECC said the ministries of maritime affairs and petroleum should work closely to assess the requirements for setting up of new gas terminals.