The finance division has been asked to release Rs. 388 billion to the power sector to ensure benchmark targets under SBA with the IMF.
The Economic Coordination Committee of the cabinet has directed the Finance division to release Rs. 388 billion to the power sector to ensure the benchmark targets under the stand-by Arrangement (SBA) with the International Monetary Fund (IMF).
Sources told ProPakistani that the ECC meeting held under the chair of Federal Minister for Finance, Revenue, and Economic Affairs, Dr. Shamshad Akhtar directed the Finance division to release Rs. 388 billion to the power sector to reduce the Circular Debt by settling the arrears of K-Electric and government Owned Power Plants (GPPs).
ECC approved the release of Rs. 124 billion for K-Electric out of which Rs. 57 billion will be released before December end while remaining Rs. 57 billion in the 3rd Quarter of FY 23-24.
Moreover, ECC also approved the release of Rs. 264 billion to Government Power Plants (GPPs), Rs. 132 billion out of Rs. 264 billion will be released before December end, and the remaining Rs. 132 billion in Q3 of FY 2023-24.
Sources said that Rs. 388 billion funds will reduce the Circular Debt by settling the arrears of KE and GPPs.
The same settlement is bound to settle around Rs. 150 billion of Circular Debt of the Gas sector which is also among required other actions under SBA with the IMF, sources added.
The above liquidity to KE and GPPs will be channeled to settle the receivables of gas-providing utilities which in turn have to pay the trade debt of PPL and PSO which have a receivable of Rs 450 billion in the Gas sector towards these power entities.
The released funds to KE and GENCOs will further clear the payment to gas companies, reducing the PPL and PSo receivables by Rs. 150 billion in CFY.
Sources said that the Finance Division has also intimated these gas companies for an upward revision in their estimated Dividends’ payment to GoP while keeping in view the improved liquidity of companies enabled through this settlement scheme.
