The Central Power Purchasing Authority (CPPA) has disbursed nearly Rs142 billion to Independent Power Plants (IPPs) in order to reduce the stock of circular debt. The outstanding payment was made on June 27.

The development is in line with the International Monetary Fund’s (IMF) recommendation of reforms and progress in the energy sector in a recently signed staff-level agreement for an SBA facility amounting to $3 billion, said Rao Aamir Ali at brokerage house Arif Habib Limited (AHL) in a report on Wednesday.

Controlling the bulging circular debt, especially, in the power sector has been one of the key demands of the Washington-based lender.

“The authorities’ program also includes ongoing efforts to strengthen the viability of the energy sector (including through a timely FY24 annual rebasing), improving SOE governance, and strengthening the public investment management framework, including for projects needed to build resilience to climate change,” the IMF stated in its press release announcing the staff-level agreement on Friday.

Here is the list of IPPs:

Background

As per the Ministry of Energy’s monthly report, during 11MFY23, the stock of circular debt increased by Rs394 billion to Rs2,646 billion, which translates into a monthly average Rs35.8 billion, compared to a decline of Rs27 billion during the same period last year.