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ISLAMABAD: The Ministry of Finance (MoF) has reportedly raised objections on circular debt reduction plan tailored by Caretaker Minister for Power and Petroleum Muhammad Ali saying that under the Standby Arrangement (SBA) with the IMF, GoP has committed not to allow supplementary grants for any additional unbudgeted spending over the parliamentary approved level in CFY 20 23-24, sources close to Secretary Finance told Business Recorder.

Finance Ministry, in its initial comments on issuance of Technical Supplementary Grant (TSG) of Rs 157 billion, stated that allocation of Rs 82 billion for the principal settlement of TFCs issued to OGDCL is available in CFY.

Against Rs 46 billion requirement for CPPA-G balance allocation of Rs 25 billion is available as Rs 21 billion has already been released to Gencos-II and III during disbursement of Rs 131 billion as first tranche of GPPs settlement in CFY.

Power, gas: business leader voices concerns over circular debts

Finance Ministry further commented that against Rs 29 billion requirement for Pakistan State Oil (PSO) through SNGPL, Rs 5 billion has already been disbursed to SNGPL and Rs 9 billion is under process of release in Finance Division. Rs 15 billion is the balance allocation under RLNG diversion cost, and Petroleum Division must ensure that all the payments in this regard are routed to PSO.

Summing up comments on issuance of TSG of Rs 157 billion, Finance Ministry stated that Rs 35 billion out of the proposed settlement plan has already been released (including Rs 9 billion under process) and only Rs 122 billion is available to be utilized.

On the proposal to issue Supplementary Grant (SG) of Rs 745 billion for two days, Finance Ministry pointed out that as regards the proposal for SG of 386 billion and Rs 259 billion for SNGPL and SSGCL respectively on the request of Finance Division, Auditor General of Pakistan has verified the negative GDS claims of Sui Companies only to the extent of Rs 414 billion.

Therefore, the jurisdiction for additional amounts need to be clearly stated. Moreover, Petroleum Division may also clarify whether a clear decision of Federal Government (ECC/ Cabinet) is available wherein any price differential has been agreed to be provided as subsidy.

Finance Ministry further contended that the plan does not provide justification for provision of additional amounts for clearing the payables of NPPMCL plants. It is understood that NPPMCL is already being treated at par with IPPs for the invoice clearing by CPPA-G i.e. 80-85 per cent invoice payment, whereas other GPPs are being paid at 75-80 per cent of invoice (WAPDA & GENCOs).

The government agreed to pay the overdue amounts of IPPs and GPPs under settlement plan of 2020. As part of that plan, Rs 47 billion has already been disbursed to NPPMCL while ensuring a uniform treatment with all GPPs. The proposed payments are over and above that plan for which justification is not available.

On Seriatim disbursement, Finance Ministry has no objection to the utilization of Rs 77 billion from CPPA-G anticipated FC surcharge collection for payment to OGDCL. However, Power Division must ensure that the said amount is in line with the circular debt targets under the SBA.

Commenting on repatriation of payments, Finance Ministry argued that while the plan includes Benazir Employees Stock Option Scheme payments to GoP from OGDCL there is no mention of PPL payables which also need to be included.

According to the main features of circular debt reduction plan, it will be restricted to public sector companies only, budget neutral and zero leakage as total settlement of Rs 1.268 trillion will be done.

Copyright Business Recorder, 2024

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