ECC Approves Rs. 659.6 Billion Guarantee to Clear Overdue Payments to IPPs

The Economic Coordination Committee (ECC) on Thursday approved a government guarantee worth Rs. 659.646 billion to address the circular debt financing of Rs. 1.225 trillion in the power sector. The decision was made during a meeting of the ECC under the chairmanship of Finance Minister Muhammad Aurangzeb. It aims to settle Power Holding Limited’s outstanding debt and overdue payments to Independent Power Producers (IPPs). The ECC also authorized the Finance Division to issue a Letter of Comfort to facilitate the process. The Power Division has been directed to report back to the ECC on the timeline for closing Power Holding Limited once the debt settlement is completed. This could help stabilize the energy sector’s finances, reduce circular debt accumulation, and restore liquidity in power sector operations. Federal ministers for Power, Petroleum, and Commerce also attended the meeting alongside senior officials from relevant divisions and regulatory bodies. The Committee also approved a proposal by the Ministry of National Food Security and Research for the reallocation of funds within the Division. The approval allows the transfer of resources from the IPC Division through a technical supplementary grant to support ongoing agricultural research initiatives.