Federal Minister for Planning and Development Asad Umar said on Tuesday that the circular debt build up for the period of July-April this fiscal year has been reduced by Rs189 billion as compared to the previous year.
“Circular debt build up jul-apr this fiscal year is 260 billion vs 449 billion same period last year, a reduction of 189 billion,” the minister said in a series of Twitter posts today.
“The full year circular debt build up this year is expected to be more than 100 billion LESS than the circular debt build in PMLN last year of govt!,” he added.
Umar further stated that the “huge improvement” in the circular debt build up as compared to the last year of the Pakistan Muslim League-Nawaz (PML-N) govt was “achieved despite massive increase in capacity payments caused by decisions committed by pml govt. PMIK govt improving performance and clearing mess inherited from PMLN in every sector.”
This improvement in energy sector performance and slow down in build up of circular debt has been the result of sustained hard work, analytical data based decision making and willingness to break the nexus between decision makers and powerful elite.” he maintained.
Earlier this month, it was reported that the China Pakistan Economic Corridor (CPEC) power projects were also hit by the circular debt and that the government has not been able to clear Rs188 billion due payments in breach of a bilateral energy framework agreement.
Although the outstanding payments are only 18.4% of the billed amount, it has started affecting the financing models of the Chinese sponsors of the Independent Power Producers (IPPs), set up under the CPEC agreement.
“Pakistan has so far paid Rs832 billion on account of power purchase price to the Chinese IPPs,” Special Assistant to Prime Minister on Energy Tabish Gohar told The Express Tribune. Gohar said that the Central Power Purchase Agency Guaranteed (CPPA-G) could not clear Rs188 billion worth dues.
The outstanding amount is only 18.4% of the total billed amount of Rs1.02 trillion, which is not a very large sum, he added. The PM’s aide said that 82% payment ratio was very good given the fact that total outstanding circular debt has increased to Rs2.6 trillion.
