Finance, Energy Division lock horns over payment of Rs262 billion to power plants

ISLAMABAD: The Ministry of Finance and the Ministry of Energy (Power Division) have locked horns over payment of Rs262 billion to government-owned power plants (GPPs).

Sources said that the Ministry of Energy has forwarded a summary to the Economic Coordination Committee (ECC) of the Cabinet, seeking the settlement of payables to GPPs at par with independent power producers (IPPs).

The Power Division had submitted a summary to the ECC of the cabinet, seeking approval for clearing liabilities amounting to Rs444.5 billion in respect of GPPs and the ECC had approved a supplementary grant of Rs182.465 billion for payment to the Pakistan Atomic Energy Commission (PAEC), the Water & Power Development Authority (WAPDA) and the National Power Parks Management Company (NPPMCL), as per the payment mechanism already approved for IPPs, was accordingly approved and subsequently released in FY22-23.

For the remaining payments of Rs262.075 billion to WAPDA and other GPPs, it was proposed that an exercise may be carried out for cash and non-cash settlement by the Power Division, the Finance Division and the Economic Affairs Division.

An amount of Rs262.075 billion has been allocated in financial year 2023-24, sources said, adding that the Finance Division had been taken on board and it had been agreed that of the Rs262.075 billion, Rs131.035 billion may be released in the second quarter and the remaining Rs131.040 billion may be released in the third quarter of the financial year 2023-24.

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The Ministry of Energy has proposed that the Finance Division to release Rs131.035 billion to GPPs (Rs26.782 billion to generation company (GENCO-II); Rs 2.965 billion to GENC0-III; Rs83.638 billion to WAPDA; Rs16.015 billion to Quaid-e-Azam Thermal Power (RLNG) and Rs1.635 billion to Quaid-e-Azam Solar Power) in the second quarter, and similarly, payment of Rs131.040 billion to GPPs ( Rs26.787 billion to GENCO-11; Rs2.965 billion to GENC0-111; Rs83.638 billion to WAPDA; Rs16.015 billion to Quaid-e-Azam Thermal Power (RLNG) and Rs1.635 billion to Quaid-e-Azam Solar Power) have been proposed by the Ministry of Finance for the third quarter.

Sources said that the Finance Division has proposed that WAPDA and GENCO-II first clear their liabilities (dividend payables) to the government of Pakistan before their dues were cleared.

The sources said that the matter was likely to be approved by the ECC on Wednesday, as the Ministry of Energy has argued that the settlement of payables to GPPs was essential to improve their financial health and operational efficiency and curtail the power sector circular debt.