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The Ministry of Finance has disbursed a substantial amount of Rs200 billion on account of circular debt subsidy alleviate the financial strain in the power sector, specifically targeting the escalating circular debt, which had surged to Rs2.7 trillion based on recent estimates.
Following the disbursement of this significant amount, the residual circular debt in the power sector is projected to be around Rs2.5 trillion by the conclusion of December 2023.
Official sources have verified that this Rs200 billion subsidy clearance will play a pivotal role in settling circular debts within both the power and gas sectors, with the allocated funds addressing a substantial portion of Rs80 billion in gas sector circular debt.
A high-ranking official revealed that the Ministry of Finance granted approval for the disbursement on a Wednesday evening, and the funds were subsequently transferred to the concerned ministry on Thursday.
In a meeting held on December 19, 2023, the Economic Coordination Committee (ECC) of the Cabinet deliberated on a summary pertaining to the settlement of payables to Government-Owned Power Plants (GPP) at par with Independent Power Producers (IPPs). The ECC endorsed the release of Rs262.075 billion to public sector power plants through a Technical Supplementary Grant (TSG).
The Ministry of Power had formally sought approval for a Technical Supplementary Grant of Rs262.075 billion, specifically for the second-quarter payment of Rs131.035 billion to Government-Owned Power Plants (GPPs). This encompassed allocations for various entities, including Genco-11, Genco-111, Wapda, Quaid-e-Azam Thermal Power (RLNG), and Quaid-e-Azam Solar Power.
The ECC not only approved the request but also directed the utilization of funds to prioritize the clearance of foreign-relent loans and cash development loans.
Power sector Aid: n the fiscal year 2023-24, a substantial budgetary allocation of Rs127 billion has been designated for K-Electric tariff differential subsidy arrears. To bolster the liquidity of the power sector, an immediate release of Rs57 billion to CPPA-G as an advance subsidy has been initiated, with adjustments to be made accordingly.
Read More: Dusk News Business