Pakistan power sector cash flow boosted with $713 Million Approval

A significant fiscal move by Pakistan to calm its ailing energy infrastructure, the approval of a $713 million grant aims to stabilize Pakistan power sector cash flow and alleviate liquidity strains..The move comes when the cash flow of the power sector of the country is in trouble due to the growing circular debt, and the inefficiency in the distribution companies is putting a financial burden on the national economy. The move is approved by Economic Coordination Committee (ECC) headed by Finance Minister Muhammad Aurangzeb and is part of the larger reform commitments in the program of the International Monetary Fund (IMF) in Pakistan. It is hoped that the funding will be able to maintain operational stability, rebuild investor confidence and maintain smooth operation of electricity supply chains.

ECC Approves Major Grant for Power Sector Stability

The Economic Coordination Committee, which is the highest economic body in Pakistan has passed a Technical Supplementary Grant of 200 billion Pakistani rupees (about 713 million dollars) to support the Pakistan power sector cash flow issue. The Finance Division established that the money will be injected as government investment in the Distribution Companies (DISCOs) equity.

This ruling indicates that the government has accepted the liquidity deficits that remain to plague the electricity production, transmission and distribution in the nation. The government will position DISCOs in a better financial position to minimize operational disruptions associated with late payments and unpaid subsidies.

DISCOs and the Ongoing Circular Debt Challenge

DISCOs are important in billing, revenue collection and grid maintenance. Nevertheless, years of political manipulations, poor governance, and inefficiencies have deteriorated the Pakistan power sector cash flow crisis. These shortcomings have made circular debt of their own unpaid bills which spread throughout the energy supply chain.
https://thepakistan.pk/pakistan-power-sector-cash-flow-approval/

 

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