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Federal govt gives Rs 200 billion to power companies: GENCOS get Rs 140 billion lion’s share

ISLAMABAD: In a groundbreaking effort to address the ongoing circular debt crisis in the energy sector, the government has taken swift action by disbursing approximately Rs200 billion among power companies.

Of this total, Rs140 billion has been distributed to Generation Companies (GENCOs) while Rs57 billion has gone to K-Electric.

What sets this development apart is the directive from the International Monetary Fund (IMF), requiring the recipient companies to settle their cash obligations. Consequently, there’s a high probability that these entities will provide significant dividends to their shareholders.

This initiative not only aims to alleviate the mounting burden of circular debt in the power sector but also marks a partial resolution of the gas circular debt through payments to major Petroleum sector entities, primarily petroleum and Sui companies.

Recently, the Economic Coordination Committee (ECC) greenlit the Power Division’s proposal to settle payments to Government Owned Power Plants (GPPs) at par with Independent Power Producers (IPPs), directing the release of Rs262.075 billion to public sector power plants via a technical supplementary grant.

To execute this plan effectively, the approval of a Technical Supplementary Grant amounting to Rs262 billion in Investment Head A014 under the Power Division’s investment demand in DISCOs is crucial.

Simultaneously, an agreement has been reached to disburse Rs131.035 billion in the 2nd quarter, with the remainder scheduled for release in subsequent quarters of FY24.

This allocated sum is earmarked for distribution in the 2nd quarter, encompassing payments of Rs131 billion to GPPs, allocating Rs26.78 billion to GENCO-II, Rs2.965 billion to GENCO-III, Rs83.63 billion to WAPDA, Rs16 billion to Quaid-e-Azam Thermal Power (RLNG), and Rs1.635 billion to Quaid-e-Azam Solar Power.

Previously, reports from the media highlighted the Finance Division’s request for comprehensive expenditure details regarding the Rs601 billion allocated to the Power Division, specifically for clearing obligations of Independent Power Producers (IPPs) and GPPs.

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I am an experienced writer, analyst, and author. My exposure in English journalism spans more than 28 years. In the past, I have been working with daily The Muslim (Lahore Bureau), daily Business Recorder (Lahore/Islamabad Bureaus), Daily Times, Islamabad, daily The Nation (Lahore and Karachi). With daily The Nation, I have served as Resident Editor, Karachi. Since 2009, I have been working as a Freelance Writer/Editor for American organizations.

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