ISLAMABAD: The Cabinet Committee on Energy (CCoE) has approved the revised Circular Debt Management Plan (CDMP).
The CCoE met with Federal Minister for Planning, Development, and Special Initiatives Asad Umar in the chair at the Cabinet Division here on Thursday.
The Committee approved the CDMP with directions that the three-year plan targets to minimise the annual build-up of circular debt, as well as, reduction in the stock.
The country’s circular debt has touched Rs2.5 trillion due to some deviations in the measures agreed with the lenders.
According to the sources, the Power Division had sent the revised CDMP to the Cabinet Division for onward submission before the CCoE. The Cabinet Division; however, asked the Power Division to seek comments from the Finance Division before sending it to the CCoE for consideration and approval.
The sources said that the Finance Division has examined the plan and supported it subject to the following issues concerning the fiscal complication:
On subsidies, the Finance Division is of the view that provision of electricity to Azad Jammu and Kashmir (AJK) would be made on bulk rate which has already been approved by the ECC/ Cabinet March 20, 2019, which may be implemented within 30 days after approval of the Revised CDMP. After implementation, this will reduce the subsidy more than Rs50 billion annually.
The sources said that the Power Division also provided plan in the CDMP for rationalising subsidy on account of Industrial Support Package (ISP), Zero Rated Industry (ZRI), FATA and Agri tube-wells, etc.
During the meeting, the CCoE reviewed the current situation and projections of the power sector circular debt, while approving the CDMP.
The Committee also noted the monthly report of merit order violations in the power plants dispatch due to transmission constraints and other technical reasons.
Similarly, the committee also noted the implementation status of Master Agreements and Power Purchase Agreement (PPA) Amendments with the Independent Power Producers (IPPs).
The sources said that as many as 47 Independent Power Producers (IPPs) that had signed MoUs in August 2020 paving way for discounted tariff of Rs836 billion in the next 10-12 years, have now initialled legally-binding Master Agreements.
Furthermore, the CCoE also approved recommendations of introducing a special tariff category for Urban Mass Transit projects in the Schedule of Tariff. The tariff will be applicable to Karachi Circular Railway (KCR) and other urban mass transit projects. The meeting was attended by Minister for Finance, Minister for Energy, and Minister for Industries, and officials of the ministries.
Copyright Business Recorder, 2022