ISLAMABAD: The Ministry of Finance has advised the Electricity Division to engage lenders for the rescheduling of loans of Rs129.310 billion from Power Holding Limited (PHL) as budget constraints do not allow it to pay the principal amount , informed sources said company registrar.
According to the Finance Division, as part of the negotiations held with the IMF during the 2019-2020 fiscal year, the Electricity Division submitted a summary to the ECC regarding the sector circular debt conversion/transfer electricity amounting to 804 billion rupees as public debt.
In May 2020, the ECC approved the Power Division’s proposals to repay PHL’s principal tranche of debt converted to public debt in fiscal year 2022-23.
In this regard, the Finance Division had made payments of Rs 202.381 billion to PHL for repayment of principal debt against ongoing electricity subsidies as per the ECC decision of 14 October 2020, of which Rs 72.633 billion was paid in fiscal year 2020-21 and Rs 129.7467 billion during CFY 2021-22.
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The finance division argued that due to budgetary constraints, an amount of Rs 35 billion has been earmarked for PHL’s loans account for CFY 2022-23 to be taken as equity in DISCOs against a debt due of Rs 164 .10 billion rupees during the CFY. However, after repaying Rs 35 billion of the debt payable till September 30, 2022, no funds will be available to make repayments of the balance of Rs 129.310 billion.
The Finance Division has advised the Power Division to engage the respective lenders to explore the possibility of rescheduling PHL’s remaining loans amounting to Rs 129.310 billion.
The Finance Division further stated that pursuant to ECC and Cabinet decisions, it released Rs 367.9866 billion for settlement of IPPs and GPPs (Government Power Plants) during the financial year. 2021-22 under the following headings: (i) Equity for IPPs, Rs 255.7636 billion; (ii) equity for GPPs, Rs 89 billion; (iii) exceptional subsidy, ie industrial support program (ISP), Rs 14.8839 billion; and (iii) outstanding subsidies (zero-rated industries) 24.356 billion rupees.
It was requested from the Power division that the distribution of a capital injection of Rs 384.0046 billion into DISCOs could be suggested with documentary evidence for the record.
In addition, on July 16, 2021, the ECC had advised that the reconciliation of the ongoing electricity subsidy be done on a semi-annual basis. As part of this, a reconciliation of the current electricity subsidy applications was carried out with the subsidy unit and transmitted to the Power division for signature on December 10, 2021. However, despite repeated requests, the Power division has neither signed the reconciliation or completed the reconciliation. grant applications pending until June 2021.
The Finance Division has requested from the Energy Division that a relevant officer be delegated to complete the reconciliation of the grant until June 2021 and after it is finalized it can be signed accordingly, adding that the reconciliation should also be carried out in accordance with ECC standing instructions.
Copyright Business Recorder, 2022