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ISLAMABAD: The Finance Ministry has advised the Power Division to engage lenders for rescheduling of Rs129.310 billion loans of Power Holding Limited (PHL) as fiscal constraints do not allow it to pay the principal amount, well-informed sources told Business Recorder.

According to the Finance Division, in pursuance of negotiations held with the IMF during the financial year 2019-20, the Power Division submitted a summary for the ECC regarding conversion/shifting power sector circular debt amounting to Rs 804 billion as public debt.

The ECC in May 2020 approved the proposals of the Power Division with respect to repayment of principal installment of PHL’s debt converted to public debt during CFY 2022-23.

In this connection, Finance Division had made payments of Rs 202.381 billion to PHL for repayment of principal debt against outstanding power subsidies in accordance with the ECC decision of October 14, 2020, of which Rs 72.633 billion was paid during CFY 2020-21 and Rs 129.7467 billion during CFY 2021-22.

Subsidized power to export-oriented sectors: PD says it needs Rs77.9bn

The Finance Division argued that due to fiscal constraints, an amount of Rs 35 billion has been earmarked on account of PHL’s loans for CFY 2022-23 to be taken as equity in DISCOs against payable debt of Rs 164.10 billion during the CFY. However, after repaying of Rs 35 billion against debt payable till September 30, 2022, no funds will be available to make repayments of balance amount of Rs 129.310 billion.

The Finance Division has advised Power Division to engage respective lenders to explore the possibility of rescheduling of remaining loans of PHL amounting to Rs 129.310 billion.

Finance Division has further stated that in pursuance of ECC and Cabinet decisions, it has released Rs 367.9866 billion for settlement of IPPs and GPPs (government power plants) during FY 2021-22 under the following heads: (i) equity for IPPs, Rs 255.7636 billion;(ii) equity for GPPs, Rs 89 billion;(iii) outstanding subsidy i.e. Industrial Support Package (ISP), Rs 14.8839 billion; and (iii) outstanding subsidy (zero rated industries) Rs 24.356 billion.

The Power Division has been requested that distribution of Rs 384.0046 billion equity injection in DISCOs may be intimated along with documentary evidence for record.

Furthermore, the ECC on July 16, 2021 had advised reconciliation of outstanding power subsidy to be carried out on half yearly basis. In this connection, reconciliation of outstanding power subsidy claims has been carried out with the subsidy cell and forwarded to Power Division for signature on December 10, 2021. However, in spite of repeated requests, Power Division has neither signed the reconciliation nor completed the reconciliation of pending outstanding subsidy claims till June 2021.

The Finance Division has requested the Power Division that an officer concerned be deputed to complete the reconciliation of subsidy till June 2021 and after its finalization it may be signed accordingly, adding that reconciliation should also be carried out as per standing instruction of the ECC.

Copyright Business Recorder, 2022

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