ECC approves circular debt settlement plan

The government on Wednesday approved a circular debt settlement plan and decided to immediately pay Rs80 billion to power producers and fuel suppliers out of Rs526 billion worth of dues aimed at easing their financial constraints.

Unlike June 2013 when the government cleared Rs480 billion in power sector debt in one go, this time around the Economic Coordination Committee (ECC) is more cautious and it will clear only the invoice-based energy cost.

Headed by Prime Minister Shahid Khaqan Abbasi, the ECC endorsed the Framework of Circular Debt Resettlement Plan.

The Rs80-billion debt will be cleared after obtaining loans from commercial banks and the cost of debt servicing will be recovered from electricity consumers through their monthly bills. The consumers will pay 43 paisa per unit to service the debt.

Published in The Express Tribune, 8th March