Ministry of Finance will release Rs 30 billion to the Water and Power Ministry on Thursday (today) to ensure maximum generation from Independent Power Producers (IPPs) during the canal closure period. Official sources told Business Recorder that the energy sector’s circular debt has again risen to Rs 200 billion during the first six months of current financial year due to low recovery and difference between cost of generation and price of electricity.
Finance Ministry had released Rs 101 billion prior to the release of Rs 30 billion, totalling Rs 131 billion. On Wednesday, Finance Minister Ishaq Dar in a joint briefing to the federal cabinet and Islamabad based journalists and anchorpersons claimed that Rs 220 billion subsidy earmarked in the federal budget was to arrest re-emergence of circular debt.
However, sources in the Ministry of Water and Power argue that the amount of subsidy earmarked in the budget is not meant for clearance of circular debt but to keep the power tariff the same across the country and to protect vulnerable segments of society. Finance Minister, in his briefing further stated that payment of circular debt has increased investors’ confidence, besides substantially reducing loadshedding in commercial and domestic sectors.
Author: Mushtaq Ghumman