Supreme Court orders early resolution of circular debt crisis -Pakistan Press Foundation (PPF)

Paksitan Press Foundtion

Supreme Court orders early resolution of circular debt crisis

ISLAMABAD: The Supreme Court was informed on Thursday that the current six to eight hours of daily loadshedding could increase by another three hours and 20 minutes if plants of independent power producers (IPPs) shut down because of non-payment of arrears by the government.

Advocate Khalid Anwar, representing Atlas Power Limited, told a three-judge bench headed by Chief Justice Iftikhar Mohammad Chaudhry that the size of circular debt, a major factor behind the crippling loadshedding, had swelled to Rs400 billion.

A committee comprising secretaries of finance, water and power, law and establishment division was looking into the issue of circular debt, the court was informed. The court had taken up separate petitions moved by eight IPPs requesting that the government be directed to clear the debt it owed to the energy sector.

Khawaja Tariq Raheem, the counsel for the water and power ministry, informed the court that in compliance with its earlier orders a settlement had been reached to clear Rs45 billion the government owed to the IPPs.

Under the deal the government had paid Rs8 billion on July 23 while Rs8 billion will be cleared on August 30. A payment schedule for the remaining Rs21 billion was being worked out, the counsel said.

The court ordered the government to submit details of the payment schedule. The court said the circular debt crisis should be resolved as early as possible and asked the government and IPPs to devise a joint plan to end electricity theft in the country.

“People lodge protest but from where power will be generated if the bills are not paid and electricity is pilfered,” the court observed. The government should develop an effective method to recover dues from consumers.

The petitions have been filed by Liberty Tech, Orient Power, Atlas Power Limited, Nishat Power, Nishat Chunian, Saif Power, Halmore Power and Sapphire Electric for the payment of outstanding dues of Rs11.131 billion, Rs4.121 billion, Rs10.478 billion, Rs9.661 billion, Rs10.899 billion, Rs5.722 billion, Rs2.415 billion and Rs6.974 billion, respectively.

They pleaded that the clearance of outstanding dues would help ensure continued supply of electricity to consumers. These companies which had earlier invoked the sovereign guarantees filed the petitions to initiate legal action in the country, instead of approaching international arbitrators.

The petitions asked whether the failure of the government to honour the sovereign financial guarantees it had given to IPPs was not an act of mis-governance fraught with grave consequences for the wellbeing and prosperity of Pakistan.