Dar directs committee to finalise action plan for settlement of circular debt

Federal Minister for Finance and Revenue Mohammad Ishaq Dar on Saturday directed the committee, formed on circular debt settlement, to finalise its report and action plan for early settlement of circular debt in the gas sector.

Dar chaired a meeting on reforms in the energy sector at the Finance Division, read a statement released by the Ministry of Finance.

Reforms and Resource Mobilization Commission (RRMC) Chairman Ashfaq Yousuf Tola, also the convenor of the committee, apprised the chair of the quantum of circular debt in the gas sector.

He also informed the chair of the modalities and framework to introduce reforms in the energy sector, which would help offset the burden of circular debt, read the statement.

The meeting discussed viable proposals focused on bringing sustainability to the energy sector to achieve economic growth in the country.

Dar sharpens focus on energy circular debt

The finance minister emphasised the priority of the government to address the issues of the energy sector including circular debt to bring financial sustainability of the sector and economic growth of the country.

Minister of State for Finance and Revenue Dr Aisha Ghous Pasha, Minister of State for Petroleum Musadik Masood Malik, SAPM on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, Ashfaq Yousuf Tola Chairman Reforms and Resource Mobilization Commission (RRMC), Chairman SECP, Controller General of Pakistan, Accountant General of Pakistan and senior officers from Finance and Petroleum Divisions attended the meeting.

Last month, the Finance Division constituted a 10-member committee on circular debt settlement of the gas sector on Wednesday with a timeline to submit a report within 10 days after holding day-to-day meetings.

The members of the committee included the Secretary, Additional Secretary (Petroleum Division), Secretary, Additional Secretary (Power Division), Additional Secretary Corporate Finance (CF) Finance Division, Member Secretary, Commissioner SECP Abdul Rehman Warriach, Chief Financial Officers of Pakistan Development Fund (PDF), Oil and Gas Development Limited (OGDCL), Government Holding (Pvt) Limited (GHPL), Pakistan State Oil (PSO), Pakistan Petroleum Limited (PPL), Sui Northern Gas Pipeline Limited (SNGPL), Sui Southern Gas Pipeline Limited (SSGCL), and Central Power Purchase Authority (CPPA-G).

Terms of Reference (TORs) included undertaking a detailed mapping of gas sector circular debt stock as of June 30, 2022, segregating the principal amount of debt, late payment surcharge (LPS), penalties, and LDs among the under-reference public sector entities of petroleum and Power Sectors; to work out a comprehensive circular debt settlement plan through cash/ non-cash release adjustments; and to identify legal and procedural requirements to implement of CD settlement plan.

The issue of circular debt is a key element in reviving the International Monetary Fund (IMF) bailout programme, without which experts believe Pakistan would face further economic difficulties.

Policymakers are currently facing turmoil in Pakistan amid sharp fall in reserves that, at $4.6 billion, are not enough to cover even one month of imports. The disbursement of IMF funds has been delayed on account of Pakistan’s struggle to implement some key prior conditions.