2 min read
In a major move to ease financial strain in the power sector, the Economic Coordination Committee (ECC) has approved a government guarantee of Rs. 659.6 billion to clear overdue payments to Independent Power Producers (IPPs) and address part of the sector’s Rs. 1.225 trillion circular debt.
The decision, taken in a meeting chaired by Finance Minister Muhammad Aurangzeb, aims to settle Power Holding Limited’s outstanding liabilities and restore financial stability within the energy supply chain. The ECC also authorized the Finance Division to issue a Letter of Comfort to expedite the process.
An official from the Power Division said the move would “help improve liquidity in the power sector and ensure smoother payments to energy producers.”
The division has also been directed to present a detailed timeline for closing Power Holding Limited once the settlement is finalized.
Experts note that the step could help reduce circular debt accumulation and enhance investor confidence in Pakistan’s energy market. Federal ministers for Power, Petroleum, and Commerce were present at the meeting along with senior officials from key regulatory bodies.
