Rs.90bn Circular Debt payment likely this week

May 31, 2021

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Thirty-Five independent power producers (IPPs), including Hubco and KAPCO, are likely to recieve Rs 90 billion by the end of this week, as first installment of Circular Debt Payment, reports Business Recorder.

According to proposed terms approved by the ECC on May 6, 2021 and approved by the Federal Cabinet at a meeting held on May 18, 2021, the government will have to pay 40 percent of the agreed amount as a first installment to 35 IPPs.

Representatives of the IPP and the regulator, who played a key role in monitoring agreements and reducing IPP revenues, urge the government to pay the agreed amount to the IPPs who are cleared by NAB.

The government will had to pay Rs 403 billion to 47 IPPs by December 2021, of which a first installment of 40 percent of the agreed amount of Rs180 billion was to be paid to all IPPs by 31-March, however, payments of 12 IPPs were withheld. Now Rs. 90 billion will be paid out for 35 IPPs.

The first tranche of 40 percent, duly divided into cash, PIB and Sukuk, to be disbursed to the relevant IPP, will be adjusted against the electricity subsidy for FY2019-20 and 2020-21. Similarly, the remaining 60 percent will be taken care of in the next fiscal year.

The Power division sought to replenish Rs 90 billion to pay for 40 percent of the agreed amount of IPP created under Generation Policy 1994 and Generation Policy before 1994.