Pakistan Mulling to Buy Oil-Run IPPs All at Once, Bloomberg
Gauhar said the country would pay off at much as Rs 400 billion in late fees to power producers in connection with a deal to counter the gigantic circular debt
Pakistan is aiming to buy oil-run Independent Power Producers (IPPs) which will help save at least Rs 300 billion instead of opting to clear their arrears under circular debt spanning over the next seven years.
This was claimed to be said by Special Assistant to Prime Minister Imran Khan on Energy Tabish Gauhar according to Bloomberg.
To counter the challenge of gigantic circular debt, Gauhar said the country would pay off as much as Rs 400 billion in late fees to power producers in connection with a deal with them last year. He added that the government would approach banks which will reshape the remaining amount of debt.
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Pakistan is planning to pay off debt worth Rs 2.2 trillion, equivalent to $14.4 billion, under circular debt of the energy sector.
Cutting down liabilities in the energy sector to a significant level is also a condition set by the International Monetary Fund (IMF) for its bailout package of $6 billion.
If the debt is not reined, it would surge to Rs 4.5 trillion by the year 2023.
To counter the issue of ever-growing liabilities at once, the Pakistani government is mulling to purchase all electricity plants that are run on oil. This includes Hub Power Co power plant too, reported Bloomberg.
Despite these measures, the government will be forced to increase power tariffs for domestic and industrial consumers over the next five years.
Further, Gauhar said the government was also planning to give incentives to the oil refineries to make upgrades worth $2 billion.
For this purpose, they would be provided relief in duties on imported material. According to Bloomberg, the step is being taken because many oil refineries in Pakistan are producing fuel oil that is not in demand.
