A meeting of the Economic Coordination Committee (ECC) of the Cabinet has sought suggestions from relevant departments by Monday for dealing with the issue of Rs 1,178 billion circular debt posing a serious challenge to the economy. The ECC meeting presided over by Finance Minister Asad Umar on Wednesday was presented the data compiled up to July 31, 2018 by the Ministry of Energy.
The meeting was informed that the amount of current amount of circular debt increased to Rs 596 billion after an increase of Rs 30 billion in July 2018. Another Rs 582 billion is parked with the Power Holding Companies Limited (PHPL) under the Syndicated Term Finance Facility (STFF) arrangements, bringing the total liabilities of power sector to Rs 1,178 billion.
The ECC identified some key areas - less than regulatory benchmarked performance (both losses and recovery), non-realization of subsidies, delayed determinations of tariff for end consumers (court stays, quarterly adjustments), and non-payment by provincial governments - that accounted for the pile-up of circular debt liabilities.
The ECC formed different committees to work upon the reasons and formulate their suggestions to be presented in the next ECC meeting that is to be scheduled in the next week. An official said the next ECC meeting will take place on Monday. The ECC will subsequently present its suggestions to the Cabinet for approval and decision on the future course of action.
The chairman ECC stated that all facts will be shared with the public for a transparent and inclusive exercise. Asad Umar expressed his displeasure on the issue of fertilizer pricing and its export - a decision taken by the previous government - and described it totally against the interests of the farmer community. He said the interest of the poor farmers must be the supreme motivation for taking such decisions.
The meeting was informed by the Industries Division that the total requirement of fertilizer for the country for this sowing season would be around 600,000 tons. The ECC directed that a committee will be formed under the chairmanship of Advisor Industry and Production Abdul Razak Dawood to hold discussions with the local fertilizer industry to ascertain the total domestic production.
The committee will present its recommendations in the next ECC meeting following which decision will be made regarding import of urea. The summary for Pakistan State Oil (PSO) financial health and liquidity position was deferred as the issue is closely linked with circular debt; therefore, the matter would be considered subsequently.
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