ISLAMABAD: To control the rising circular debt, the Cabinet Committee on Energy (CCOE) approved the summary presented by the Power Division to ensure effective management of Circular Debt.

A meeting of the Cabinet Committee on Energy (CCOE) was held under the Federal Minister’s Chairmanship for Planning, Development, and Special Initiatives Asad Umar on Monday. The CCOE discussed the summary of the comprehensive Circular Debt Management Plan (CDMP) 2021, which covers the three years from FY2020-21 to FY2022-23 and describes the mechanisms and initiatives to address the issue and suggests an action plan to control the flow of Circular Debt with a monitoring matrix. After due deliberations, the committee approved the Power Division’s plan to control circular debt, which likely to reach Rs 2.6 trillion by the end of the on-going fiscal year. This Circular Debt Management Plan will soon be presented to Prime Minister Imran Khan in a cabinet meeting for approval. The Power Division will likely seek a further increase of Rs 1.50 to Rs 2 increase in the power tariff to control circular debt.  

The Committee also discussed the need for fast-tracking action to implement Renewable Energy Policy approved by the Government. The Committee directed the Ministry of Energy to expedite the move to auction renewable energy projects to ensure greater use of renewable energy resources.

According to a source in the Power Division, there is immense pressure from the IMF to reduce the losses in the power sector. He said the recent increase in power tariff by Rs 1.95 per unit slow-down the increase in circular debt; otherwise, it would reach Rs 2.8 trillion by the end of FY21. He said an additional subsidy of Rs 197 billion required in the on-going financial year, whereas the Ministry of Finance allocated Rs 140 billion. 

He said because of expensive agreements with IPPs done by the PML(N) government during this year. The IPPs would get Rs 784 billion as capacity charges. He said right now. The government is providing a subsidy of Rs 1.83 per unit subsidy. 

The meeting was attended by Minister for Energy Omar Ayub Khan,  Finance Minister Abdul Hafeez Sheikh, SAPM on Petroleum Nadeem Babar, Special Assistant to PM on Power Revenue Dr Waqar Masood and officials of various Ministries/Divisions.


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