ECC approves Rs388 billion for power sector to curtail circular debt

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved Rs388 billion to the power sector to reduce the circular debt, as part of the standby arrangement (SBA) with the International Monetary Fund (IMF).

The ECC, chaired by Caretaker Finance Minister Dr Shamshad Akhtar, directed the Finance Division to release the amount to settle the dues of K-Electric and government-owned power plants (GPPs) by the end of the third quarter of the current fiscal year.

According to sources, Rs124 billion will be allocated for K-Electric, with Rs57 billion to be disbursed by December end and the remaining Rs57 billion by the third quarter of the fiscal year 2023-24.

Similarly, Rs264 billion will be earmarked for GPPs, with half of the amount to be released by December end and the rest by March 2024.

ECC approves Rs21bn to settle payment dispute with Port Qasim Electric Power Company

The sources said that the funds will help settle the arrears of the power sector and reduce the circular debt, which is also a requirement under the SBA with the IMF.

The settlement will also ease the liquidity crunch of the gas sector, which owes Rs150 billion to Pakistan Petroleum Limited (PPL) and Pakistan State Oil (PSO).

The sources said that the gas companies have been asked to increase their dividend payments to the government, as their cash flows will improve after receiving the payments from the power sector.