The government’s Rs659.65 billion guarantee for circular debt financing is approved by the ECC.

The Power Division’s summary for issuing a Government of Pakistan guarantee for Rs659.646 billion for the financing of Rs1.225 trillion in circular debt was authorized by the Economic Coordination Committee (ECC) on Friday.

According to the Finance Division, the guarantee was meant to satisfy the debt of Power Holding Limited (PHL) and past-due payments to Independent Power Producers (IPPs).

The Finance Division was also given permission by the ECC to issue a Letter of Comfort in this regard.

It instructed the Power Division to provide a report outlining the timeline for PHL’s closure when the debt issue was resolved.

The ECC meeting, which was chaired by Finance Minister Muhammad Aurangzeb, made the decision.

Throughout the meeting, the ECC reviewed an additional summary that the Power Division had provided on the rationalization of tariffs and payment adjustments for the Oil & Gas Development Company Limited (OGDCL), Sui Northern Gas Pipelines Limited (SNGPL), Government-owned Power Plants (GPPs), and nuclear power plants (NPPs).

The Prime Minister’s Task Force on Power Sector Reforms developed the idea, which attempts to lower total power sector costs, improve financial sustainability, and expedite payments.

In order to support fiscal balance and tariff rationalization, the committee approved the framework that the involved parties had agreed upon for the settlement of unpaid debts and the remission of some financial claims. According to the Finance Division, these actions are a part of the government’s larger initiatives to guarantee long-term cost effectiveness and improve the energy sector’s financial stability.