The government will settle Rs 157 billion circular debt of total outstanding of Rs 503 billion in the current fiscal year through issuing bonds, reliable sources told Business Recorder. Sources close to Finance Minister Senator Ishaq Dar said bonds worth Rs 127.801 billion would be issued to clear the circular debt of Oil and Gas Development Company Limited, Pakistan Petroleum Limited and Pakistan State Oil (PSO).
Pakistan State Oil would also be paid Rs 33.217 billion through bank borrowing. Ministry of Finance allocated Rs 326 billion in the last fiscal year to clear the circular debt which led to an escalation of fiscal deficit by around 1.4 percent in 2012-13. This would enable a lower impact on the deficit with further circular debt retirement in the current fiscal year if the government manages to successfully launch Rs 127.801 billion bonds of OGDCL, PPL and PSO to settle the remaining payable. Sources said the plan was presented to the Economic Co-ordination Committee of the Cabinet for consideration and approval. The meeting was recommended to approve cash payment of Rs 161 billion to the Independent Power Producers (IPPs) and Rs 30 billion cash payment to PSO. The proposed plan was to settle Rs 127 billion outstanding amount of OGDCL, PSO and PPL through issue of bonds.
The circular debt settlement plan included intra-government settlement of Rs 90 billion to Wapda, Rs 10.216 billion to National Transmission and Dispatch Company (NTDC), Rs 14 billion to Gencos and Rs 22 billion to nuclear plants. Sources close to the Finance Minister said Wapda, NTDC, Gencos and nuclear plants owe a higher amount to the federal government than what the government owes them on account of circular debt. The power sector circular debt of Rs 16.432 billion of Mari Gas and Rs 3.278 billion Government Holding Company would be settled through intra-government settlement.
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