ISLAMABAD: The government has approved an amount of Rs 76.726 billion to maintain commitment of Circular Debt Management Plan (CDMP) with the IMF and clear liabilities of Government owned Power Plants (GPPs), well-informed sources told Business Recorder.
The Federal Cabinet in its decision of February 28, 2023 approved revised Circular Debt Management Plan (CDMP) and allowed Rs 335 billion as advance payment under various heads of accounts including release of Rs 58 billion against Balochistan agricultural subsidy from head of account of IB 9048 subsidy.
However, Finance Division in its letter of June 02, 2023 did not concur with release from IB No. 9048 and advised Power Division to consider availing an amount of Rs 56 billion against any other head of subsidy.
Swelling circular debt also affects NPPs
Considering viewpoint of Finance Division, the latter was requested to release an advance subsidy of Rs 56 billion against the AJ&K receivables under cost entry IB-9054 during FY 23 to maintain its CDMP commitments as approved by Cabinet.
However, owing to deviation from the Cabinet decision, Finance Division advised to seek approval of approval of the ECC of the Cabinet for reallocation of cost centre IB 9048 to cost centre IB-9054 for release of advance subsidy against the receivables of AJ&K.
Finance Division in its letter citing reference of Power Division on May 25, 2023 argued that sufficient allocation of subsidy of Rs.210 billion was available in April 2023 under the Power Division’s demand. Therefore, there is no justification for enhancement of Rs.90 billion in the circular debt in the month of April, 2023.
Moreover, with respect to supplementary grant of Rs.58 billion, a meeting was held on May, 31 2023 in the office of AFS (CF) duly attended by the Joint Secretary (PF), Power Division.
After detailed deliberation, it was decided that Power Division should consider availing amount of Rs.56 billion against any head of subsidy where verified legitimate claims are available. This would help Power Division to maintain its CDMP commitments.
Besides ECC vide decision of March 30, 2022, inter alia, directed to hold reconciliation of subsidy claims till June 2022. Power Division has been time and again requested to carry out reconciliation along with other subsidy claims.
The Finance Division requested Power Division once again to advise the concerned officers to undertake exercise of reconciliation with this Division till June, 2022 as well as FY2022-23.
In February 2023, Power Division in its summary to the Cabinet, noted that one major challenge is that of circular debt which stood at Rs 2.253 trillion at the end of FY-2022, hinting that due to a number of contributing factors, the circular debt flow is expected to be around Rs 952 billion for FY-23, if corrective measures are not taken.
Considering this unprecedented accumulation of circular debt and cash flow constraints, the Prime Minister in a meeting of February 6, 2023, approved in principle the Revised Circular Debt Management (CDMP) (CDMP) for power sector which included multiple corrective measures.
The revised CDMP, inter-alia, entails the following key policy decisions for immediate implementation: (i) discontinuation of Zero-Rated Industry (ZRI) package from March 2023; (ii) discontinuation of Kissan Package from March-23; and (iii) additional subsidy allocation of Rs 335 billion for Power Division.
While considering the proposal of Power Division it approved 56 billion as an advance subsidy against AJ&K.
The government has also approved Rs 20.726 billion to clear outstanding payables of Government Owned Power Plants (GPPs) of which Rs 598 million will be paid to (Chashma Nuclear Power Plant-1), Rs 1.090 billion Chashma-2, Rs 1.278 billion Chashma-3, Rs 1.350 billion Chashma-4, Rs 1.551 billion Haveli Bahadar Shah, Rs 1.228 billion Balloki Power (RLNG) Rs 13.631 billion Wapda hydel.
Copyright Business Recorder, 2023
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