Rs10bln allocated for interest payments on energy sukuk-II

ISLAMABAD: The government on Wednesday allocated Rs10 billion for the six months interest payment on energy sukuk-II, while forming a committee to propose ways to get rid of growing circular debt in the power sector.

The Economic Coordination Committee (ECC) of the cabinet allocated the fund from stimulus package for the interest payment for the period between 21 May and 20 November on energy sukuk-II amounting Rs200 billion issued earlier this year by the government to raise money for the settlement of power sector’s circular debt.

Adviser to the Prime Minister on Finance Hafeez Shaikh presided over the ECC meeting with participation of ministers and other officials.

ECC formed a committee headed by Adviser to the PM on Institutional Reforms and Austerity Ishrat Hussain, Waqar Masood Khan, representatives of finance and power divisions to prepare a proposal for the settlement of dues of power sector and other related issues for onward submission to the ECC.

ECC in principle approved technical supplementary grant amounting to Rs72.6 billion to Power Holding Limited (PHL) for onward disbursements to respective banks or through financial instruments as and when due during the current financial year.

In an earlier decision, ECC had decided to shift the power sector debt stock of Rs804 billion to public debt. As per debt repayment schedule agreed between PHL and lending institutions, Rs72.6 billion was required to be paid partially during the FY2020 and remaining is payable in 2021 as principal repayments to lenders.

Furthermore, the loan amounting to Rs82 billion taken from Oil and Gas Development Company and included in the total of Rs804 billion is required to be considered separately through non-cash/cash settlements.

The committee further approved the allocation of funds for implementation of the interest free loans program by Pakistan Poverty Alleviation Fund. Benazir Income Support Program surrendered funds amounting to Rs4.9 billion in favour of Pakistan Poverty Alleviation Fund during the current fiscal year.

Ministry of energy requested the ECC to give directions for the settlement of a loan of about Rs7.6 billion and its associated costs from National Bank of Pakistan in relation to advance payment for Turkish power company Karkey Karandeniz Elektrik Uretim.

ECC asked the finance division to engage with the National Bank of Pakistan for the settlement of the loan. It was decided that a proposal with all stakeholders on board would be presented before ECC for the final approval.

On the summary moved by the ministry of information and broadcasting for allocation of additional funds for the payment of media campaigns launched on 5th August, ECC asked the ministry of information and broadcasting to meet the immediate fund requirement through re-appropriation from its budget allocated for the current fiscal year and any shortfall due to re-appropriation of the funds would be met through technical supplementary grant towards the end of the current fiscal year.