ISLAMABAD: Prime Minister's Special Assistant on Revenue Dr Waqar Masood has reportedly proposed that loans of Power Holding Limited (PHL) should be converted into the government's capital investment instead of public debt, well informed sources in Finance Ministry told Business Recorder.
Dr Waqar Masood was head of subsidy cell in the Finance Division prior to his elevation as SAPM on Revenue.
The federal capital is abuzz with speculation that he is now tipped to play a more critical role in economic decision making. The country's business circles are also discussing the need for a change of the guard in Finance Division.
On Oct 14, Finance Division informed the ECC that pursuant to negotiations held with IMF, the ECC on May 06 had approved shifting of the power sector debt stock of Rs 804 billion .to Public Debt. Accordingly, Finance Division was to make repayments of Rs 804 billion to lenders through PHL to the extent of principal amount as and when due through cash or financial instruments; the power sector was to continue to pay. The interest, recovered through tariff and any shortfall would either be met through further debt surcharge by way of amendment in NEPRA Act or efficiency gains. The loan amounting to Rs 82 billion taken by Fl-IL from OGDCL and included in the debt stock of Rs 804 billion, being payable to a PSE, was required to be considered separately.
As per debt re-payment schedule agreed between PHL and lending institutions, an amount of Rs 72.635 billion were required to be paid partially during the FY 2019-20 and remaining was payable in 2020-21 as principal repayments to lenders.
Finance Division submitted following proposals for consideration and approval of the ECC: (i) to obtain supplementary grant of Rs 72.635 billion for repayment of the amount as public debt through PHL for onward disbursements to respective banks or through financial instruments as and when due during the CFY. This payment was to be treated against outstanding power sector subsidy claims on the part of GoP under the respective heads; (ii) the decision of the ECC of May 06, on the summary of Power Division was to be amended to the extent that the PHL's loan of Rs 136.454 being a part of Rs 804 billion, was to be paid as and when due, instead of FY 2019-20, inadvertently referred in the above referred summary/ decision and ; (iii) the loan amounting to Rs 82 billion taken from OGDCL and included in the total of Rs 804 billion being payable to PSE was required to be considered separately through cash/non-cash settlement.
During the ensuing discussion, Special Assistant to the Prime Minister on Revenue, Dr. Waqar Masood, highlighted that one of the primary reasons of the power sector circular debt was inefficiency of Discos.
Dr Waqar Masood, who has been Principal Accounting Officer of Finance Division during PPP and PML(N) regimes, also revealed many irregularities in subsidy's mechanism at a recent briefing to Prime Minister Imran Khan.
He argued that balance sheets of Discos were not healthy due to their weak financial position. Therefore, it was advisable that the treatment of disbursement/payment of the public debt should be in the shape of capital investment into Discos rather than converting debt into public loan. Adviser to the Prime Minister on Institutional Reforms and Austerity argued that similar injections were also given to Discos in the past but to no avail because of their inherent weakness to improve recovery and reduce losses.
After threadbare discussion, the ECC constituted a committee under the chairmanship of Adviser to the Prime Minister on Institutional Reforms & Austerity comprising Special Assistant to the Prime Minister on Revenue, Secretary, Finance Division and Secretary, Power Division to deliberate on conversion of PHL debt into public debt in holistic manner with special reference to nature of payment and submit viable recommendations to the ECC in its next meeting for consideration.
Copyright Business Recorder, 2020
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