ISLAMABAD : The government’s Task Force on Power Sector Structural Reforms, is to seek IMF (International Monetary Fund (IMF) nod on 3-5 years energy sector ( power sector and petroleum sector) circular debts reduction plans meant to eliminate or reduced circular debt of Rs 5 trillion with the support of Ministry of Finance, well informed sources told Newzshewz.
On January 23, 2025, Prime Minister, Shehbaz Sharif, while presiding over meeting of Power Sector Task Force, had directed that the Task Force in coordination with the Petroleum Division shall prepare a detailed proposal on the reduction of petroleum sector circular debt for presentation to the Prime Minister. Currently, petroleum sector circular debt is about R 2.7 trillion whereas power sector circular debt is Rs 2.3 trillion.
An official who is closely coordinating with the Task Force told that that this will also sent signals to the investors that the government is also thinking about resolution of their problems.
According to sources, Task Force has shared power sector circular debt reduction plan with the Finance Ministry, according to which Rs 300 billion will be saved through waive off of Late Payment Interest (LPI), which has already been agreed whereas talks on saving of similar amount is in progress. An amount of Rs 1.3 trillion is expected to be raised from the private banks with the support of Finance Ministry at six per cent fixed rate. This has also been confirmed by Special Assistant to the Prime Minister on Power, Muhammad Ali at a recent meeting of Senate Standing Committee on Power.
The sources said, different formulas will be used to eliminate company-wise circular debt so that books of all the companies are cleaned and enable them to invest more and also interest will also get rid of. Some companies have reserves, whereas some have liabilities. Currently, due to interests, companies are in loss whereas banks are making money.
Mr. Ali had prepared a circular debt reduction plan as caretaker Minister for Power and presented to the IMF, which refused to approve it as Finance Ministry had also raised questions on the proposed plan. However, this time, new schemes have been made for the power and petroleum sectors.
The sources further stated that Late Payment Interests (LPI) in the petroleum sector which is about Rs 700 billion will also be waived off , in addition to books adjustments, issuance of bonds for repayment in next three to five years is part of the circular debt reduction/elimination plan. Both Sui Companies and Pakistan State Oil (PSO) are the key players in the circular debt of petroleum sector.
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