Circular debt surges to Rs2.327 trillion in 2020-21

With power sector circular debt touching Rs2.327 trillion as of June 30, 2021, the Cabinet Committee on Energy (CCoE) on Thursday ordered expeditious implementation on oil crisis report including transfer of additional powers to Oil & Gas Regulatory Authority (Ogra) to regulate oil marketing sector.

Presided over by Planning Minister Asad Umar, the CCoE also desired a final position of all the stakeholders on the allocation of pipeline capacity and tie-in mechanism before the next meeting to secure final investment decisions (FIDs) from investors of two additional merchant LNG terminals. It was noted that discouraging signals were going out to the investors who had paid different fees and made other expenditures so far which was not a good omen.

The Power Division presented its monthly circular debt report that reported total power sector circular debt at Rs2.402tr at the end of May 2021,showing an increase of Rs251bn from Rs2.153tr carried forward on July 1, 2020.

The report provisionally projected circular debt at Rs2.327tr as of June 30, 2021 on the basis of Rs90bn payments to independent power producers (IPPs) a few days ago. As such, the power division reported an increase of Rs177bn in circular debt during the entire 2020-21 when compared with Rs541bn surge in fiscal 2019-20.