By SKM
February 25, 2024
ISLAMABAD: The government functionaries are currently in talks with banks to finalize the term sheet for borrowing Rs1240 billion to resolve stock of the circular debt which currently hovers at Rs2381 billion as the discount rate has tumbled to 12 percent from 22 percent.
“In the time to come, the discount rate may further go down and the authorities want to take advantage of the situation and borrow the amount of Rs1242 billion.”
“The relevant authorities are engaged with banks and want to finalize the term sheet prior to the arrival of the IMF mission. The governor, State Bank of Pakistan and Finance Minister are also part of the talks. The government functionaries want to borrow Rs1240 billion on the interest rate of 6-7 percent for 7 years. However, the banks want to lend the loans at KIBOR+1 rate.”
“Once the term sheet is finalized, the government will borrow the loans from banks for 7 years which will be paid back by the electricity consumers through the current debt servicing surcharge of Rs3.23 per unit in the tariff.”
More importantly, the officials said out of Rs2400 billion almost Rs720 billion has already been settled by paying the past dues of 6 IPPs whose contracts got terminated and 15 IPPs whose power purchase agreements are switched on ‘take and pay’ model The authorities have settled with IPPs amount of Rs450 billion (Rs300 billion is paid and Rs150 billion in the head of LPS is waved off). And Rs286 billion, dues of Wapda have also been settled with no interest payments.
“If the circular debt is resolved, it would ease out the power sector which is being opened to the private power market and DISCOs are being privatized.”
According to the latest data about circular debt in the power sector till November 2024, the country’s circular debt has slightly tumbled by Rs12 billion to Rs2381 billion during the July-November period of FY25 from Rs2393 billion in June 2024. However, the losses in the wake of DISCOs’ inefficiency and under-recovery stood at Rs 170 billion (Rs94 billion on account of inefficiency and Rs76 billion because of under-recovery).
The payables to power producers stood at Rs1608 billion with loan amounts parked in the power holding private company (PHPL) stood at Rs683 billion. However, the GENCOs payable to fuel suppliers stood at Rs90 billion in the first five months of FY25.
The data shows that the budgeted but unreleased subsidies stood at Rs5 billion while the interest charges on loans of PHPL and payments to IPPs stayed at Rs70 billion. In the data of November 2024 uploaded on the official website of the Power Division, it has also been highlighted that pending generation cost under the head of QTA (Quarterly tariff Adjustments) and FCA (Fuel Charges Adjustments) stood at Rs31 billion.
The data also shows that the amount of Rs11 billion was payable by K Electric to the CPPA whereas the sock payment remained at Rs4 billion. Ends
