Karachi: The government on Friday announced a payment of corporate debt amounting to $5 billion (Dh18.364 billion) to energy companies, in a move to resolve the issue of power cuts in the country.
The Economic Coordination Committee (ECC) of the cabinet, the apex decision-making body, on Thursday approved the settlement of $5 billion debt.
A ministry of finance handout said that a summary had been moved by the ministry of water and power and the ECC considered the propose for settlement of debt in the power sector in the light of the commitment made by the finance minister in his budget speech.
In the budget speech finance minister Ishaq Dar had allocated Rs326 billion towards clearing the debt.
The remaining amount is set to be paid off to the power sector companies before August 10.
Official sources said that the approval of the funds to clear the debt would provide much needed liquidity to the power sector, increase fuel availability and resolve several disputes among the different companies and the government.
It would also help ignite an idle capacity of 1000 megawatt that would ultimately be available for consumption in the country.
The ECC, however, advised the private power producers to switch fuel-fired power stations to coal-fired facilities in order to cut costs in the future.
Pakistan has been gripped by one of the worst ever power crises in recent times. On any given day, major cities across Pakistan deal with power cuts that stretch up to 10 hours at a time.
People have taken to the streets to protest the government’s inability to address the issue.
Electricity production has been 3,000 megawatt lesser than the demand and a loads shedding of eight to 10 hours is practiced to meet the shortage. However, the shortage swells to 5,000 megawatts in the unrelenting summer season.
