Circular Debt Soared to Rs. 2.37 Trillion in Q1 FY22

The circular debt was recorded at Rs. 2,379 billion in the first quarter of the current fiscal 2021-22.

The power division has informed the Cabinet Committee on Energy (CCoE) that the circular debt reached Rs. 2,379 billion from July to September (Q1) for FY 2022 which includes Rs. 1,375 billion payables to power producers, Rs. 90 billion GENCOs payables to fuel suppliers and Rs. 915 billion parked in PHL.

Sources told ProPakistani that circular debt was Rs. 2,253 billion in Q1 FY 2021 and the increase this year is due to payments of power producers. Sources also said the ministry of power has projected the circular debt to fall to Rs. 1,856 billion from October 2021 to June 2022.

Interestingly, the power division had projected a decrease of Rs. 523 billion in circular debt in the remaining nine months of the current fiscal year however now they believe that the decrease could be Rs. 425 billion owing to payments to IPPs as well as PHL principal payments.

A handout issued by the planning commission states that a meeting of the CCOE was held under the Chairmanship of the Federal Minister for Planning, Development and Special Initiatives Asad Umar here in Islamabad on Friday.

Report on Developing Petroleum Reserves

The Petroleum Division presented a report on the development of strategic petroleum reserves. It was informed at the meeting that a working group comprising OGDCL, PSO, PEPCO, PARCO, TPPL, and PRL was constituted to develop a concept paper and study the strategic reserve requirement in the country. This working group has completed the initial assessment and a detailed feasibility study is being planned based on the recommendations of the working group.

The Maritime Ministry also developed a proposal on this, therefore, CCoE was directed to constitute a committee under OGRA with the Maritime Ministry and Petroleum Division as members for finalizing the proposal and reviewing the detailed framework for the establishment of strategic petroleum reserves.

CCoE also considered the summary presented by Power Division on standard security agreements for small Hydropower projects (up to 50MW) under the Power Generation Policy 2015. It was informed that the policy envisaged the development of large as well as small Hydel projects (SHPPs).

CCoE agreed with the framework for the ongoing and committed power projects. For small dams, the CCoE said that they have already directed and approved the policy for the creation of a market-based system so that the risk and liability do not rest with the taxpayer of Pakistan. These guidelines include the Competitive Trading Bilateral Contracts Market (CTBCM) and “Wheeling Policy” which have both been designed for this very purpose. It was further directed that this policy framework for small dams should be consistent with the overall policy direction.

CCoE also reviewed the Circular Debt Report September 2021 submitted by the Power Division and appreciated the reduced accumulation of circular debt.

The meeting was attended by Minister for Finance, Minister for Energy, Advisor to PM on Commerce & Industries, SAPM on CPEC, and representatives of regulatory authorities and senior officials of Ministries/Divisions also participated in the meeting.