Minister explains circular debt strategy: Govt mulling buying IPPs to shut them

ISLAMABAD: The federal cabinet was informed on Tuesday that circular debt would increase to Rs1.5 trillion by 2023 owing to capacity payment charges as consequent to an addition of 40 to 50 percent surplus electricity by the previous government.

During a media briefing after a cabinet meeting presided over by the prime minister, Minister for Information and Broadcasting Fawad Chaudhary said that a presentation made on circular debt revealed that previous government policy of adding 40 to 50 percent excess electricity to the system was the primary reason for increase in circular debt from Rs450 billion to Rs900 billion and by 2023 the government would have to pay Rs1.5 trillion as capacity payment to the power producers, whether it purchases electricity or not.

The minister said the electricity tariff consequent to the capacity charges was increased from Rs11.75 per unit to Rs16.44 per unit, reflecting an increase of 40 percent whereas, actual increase was of around Rs 22-23 per unit.

He added that if such kind of increase due to capacity charges would have been made, it would have affected the industrial sector greatly.

The minister said that this has been the precise reason that the minister has asked power and finance ministry to find out a solution to the problem of circular debt without making any increase in electricity price.

He said that as part of the containing circular debt, the government-owned inefficient 50 percent power plants would be closed by September 2022, and the government is also holding negotiations to purchase 11 private sector IPPs to save Rs60 billion, which was being paid to them on account of capacity charges.

These IPPs would be closed down after these are purchased to save Rs 60 billion, added the minister. He said line losses and technical losses were reduced from 18.3 percent in 2018 to 17.8 percent now.

He said the prime minister has sought a report on Electronic Voting Machine (EVM) whereas, Dr Babar Awan briefed the cabinet about discussions with the stakeholders.

The minister said the government wanted consensus on EVM and electoral reforms, and urged the opposition parties to give their suggestions on electoral reforms, so that the next election could be conducted through EVM.

The minister said the government is also committed to giving voting right to the nine million overseas Pakistanis, and asked the Pakistan People’s Party and the Pakistan Muslim League (N) to come up with a “clear stance”.

The minister said that the federal cabinet was given a briefing by the National Command and Operation Centre (NCOC) head and Minister for Planning Asad Umar on the Covid-19 situation, and stated that the positivity ratio of cases was increasing. According to him, there are 5,000 patients in critical care, compared to 3,400 cases during the last wave.

He said the situation in Pakistan would have not been different from some badly-affected countries if the government had not increased the number of ventilator beds to 7,000 and doubled the capacity of oxygen last year.

He said that oxygen production was increased from 484 metric tons in June 2020 to 792 metric tons now, reflecting an increase of 308 metric tons, and that helped the country to avert an oxygen crisis.

“We are providing 400 metric tons oxygen to the health sector, which is sufficient to meet the demand of critical patients,” he said and added that the government was also in discussions with China and Iran for import of oxygen if more medical oxygen was required.

“There is crisis in Pakistan but not a situation of panic. However, if the positivity rate continues at the present rate, the situation will be out of hands,” he said.

He said that a complete lockdown was declared in Mardan owing to increase in positivity rate to 40 percent, which created a grave danger for the adjacent areas.

He said the NCOC was directed to prepare a plan to ensure supplies in case of a complete lockdown, adding that utmost effort is to avoid complete lockdown for which the government has decided to give five Eid holidays this year as 70 percent Covid is urban phenomena and more holidays will provide an opportunity to the people to go to their hometowns.”

Chaudhary said that special assistant to prime minister Dr Faisal Sultan gave a briefing on vaccination situation, and said that two million people have so far been vaccinated. Some people who are reluctant to vaccinate themselves should consider it safe, the minister quoted the SAPM as saying.

He said that 5.7 million doses of vaccine are available.

The minister said that during a presentation on Pakistan International Airlines (PIA), the meeting was informed that operational losses of the airline had been reduced from Rs 57 billion to Rs 1 billion “but its actual problem is loans, which have increased to Rs 460 billion.”

Over 450 people per aircraft in the PIA is the highest in world.

The federal cabinet has also ratified the CCOE and the ECC decisions and cabinet appointed Nadeem Lodhi, CEO, of Sindh Infrastructure Development Company, and endorsed the decisions of Cabinet Committee for Disposal of Legislative Cases (CCLC).

He said the members of the National Assembly met the prime minister and submitted their requests regarding the Jahangir Khan Tareen issue.

He said “Jehangir Tareen is an important leader of the PTI and there is great regard for him.”

The minister said the prime minister assured the MNAs that there would be no influence on Federal Investigation Agency (FIA) investigation, however, in response to their concern that Jehnagir Tareen was being “politically maligned”, the prime minister nominated Ali Zafar to submit a report to him to ascertain whether or not there has been any political motivation in relation to Jehangir Tareen’s cases.

According to an official statement, the cabinet was informed that there was a 50 percent increase in the number of critical cases compared to last year that requires strict compliance with SOPs. Private sector capacity of Oxygen production was doubled last year, two million doses of vaccines have been administered, walk-in vaccination for 50 years and above age citizens has started, registration of 40 years and above citizens has also started, according to the statement. The cabinet approved extension of application of Pakistan Essential Services (Maintenance Act 1952) to all classes of employees for six months. The cabinet approved execution of four Fast Track Development Projects, involving construction work through Infrastructure Development Authority of Punjab under Article 146(1) of the Constitution of Pakistan. The cabinet approved the signing of a framework MoU between Pakistan and Saudi Fund for Development.

The cabinet, in light of Sindh High Court order, approved Maximum Retail Price of Covid-19 at Rs8,449 for two injections pack as recommended by the DRAP.

Copyright Business Recorder, 2021