ISLAMABAD, Nov 5: With a staggering inter-corporate public sector debt at Rs53 billion mark, the government has decided to write off around Rs21 billion charges outstanding against energy sector firms, particularly Wapda and KESC.

Official sources told Dawn on Monday that a comprehensive inter-corporate debt package had been prepared by ministries of finance, water and power and petroleum and natural resources in consultation with the chief executive’s secretariat.

This included a waiver of Rs21 billion financial charges payable by Wapda and KESC to public sector petroleum firms, re- scheduling of around Rs7 billion letters of exchange (LOEs) among various energy firms at 7.5 per cent interest rate and the remaining principal amount payable at around 10 per cent mark-up from now onwards, the sources in the finance ministry added.

They said that formal approval to this effect would be accorded by the economic coordination committee (ECC) of the cabinet that would meet here on Tuesday with Finance Minister Shaukat Aziz in the chair.

Of the total Rs53 billion energy sector debt, Wapda and KESC owed Rs42 billion to petroleum firms like Pakistan State Oil (PSO), Sui Southern and Sui Northern gas companies (SSGCL and SNGPL), three oil refineries and public sector gas companies, primarily OGDCL.

Of Rs42 billion, the principal amount which had accumulated against Wapda, stood at around Rs20 billion and Rs12 billion against Karachi Electric Supply Corporation.

The rest of the amount had piled up in the shape of financial charges that oil and gas companies had calculated according to normal accounting procedure.

The sources said that the secretary, petroleum, M. Abdullah Yousaf, had a detailed meeting with heads and finance directors of all the public sector oil and gas companies last month and persuaded them to write off financial charges provided Wapda and KESC cleared their principal arrears.

The ministry of finance and the privatization commission, the sources said, were of the view that red spots on the balance sheets of oil and gas companies would have a negative impact on their privatization transactions.

It was in this background that a decision was taken to get payments from Wapda and KESC against the principal amount over a specific period and waive financial charges which had accumulated over the years.