ISLAMABAD: The government completed on Monday a non-cash transaction of Rs138 billion through book adjustments to clear energy sector’s circular debt.

“A sanction order of Rs138bn has been issued. In total, Rs480bn circular debt, including Rs342bn payments made last month, stands cleared,” said Finance Ministry’s adviser and spokesman Rana Assad Amin. The circular debt stood at Rs503bn on May 31.

The adviser told Dawn that a partly sum of Rs23bn related to cases filed by independent power producers (IPPs) in the Supreme Court was now outstanding.

He said the IPPs had agreed to withdraw cases and resolve the dispute through arbitration envisaged under the power-purchase agreements as part of a deal with PML-N government for payment of outstanding dues.

They had filed applications to withdraw cases and hopefully the court would dispose of the matter in the next hearing.

The finance ministry’s spokesman said the IPPs had also fulfilled their commitment to increase their generation by more than 1700MW after the agreement with the government last month.

As a result, average electricity generation has gone beyond 14,000MW compared with less than 12,000MW about two months back, leading to reduction in electricity shortfall to about 3,000MW also contributed by higher hydropower generation and reduced power demand.

He said that the government had made a total disbursement of Rs342bn last month, including through government bonds and about Rs20bn had returned to the government in the form of dividend on account of government shareholding in public sector companies, resulting a net disbursement of Rs322bn.

Responding to a question, the adviser said the Rs138bn worth of transaction did not involve any bond or cash payment but through adjustment of payables against receivables of the generation companies, Wapda and National Transmission and Despatch Company (NTDC). Giving an example, he said the Wapda had to pay Rs85bn to the government while its dues against the government stood at about Rs90bn which had been settled through book adjustment.

He said the finance minister had announced in his budget speech to clear circular debt by mid-August but later decided to resolve the matter ahead of the deadline.

“We have clean slate now as far as past circular debt is concerned,” he said.

Responding to a question, he agreed that about Rs1.5bn electricity dues were accumulating on a daily basis that would be addressed on approval of the energy policy by the Council of Common Interests (CCI) hopefully on Tuesday.

The circular debt adjustments have not gone well with President Asif Ali Zardari whose spokesman Farhatullah Babar questioned transparency of the transaction.

In a statement issued from PPP’s media office, Mr Babar challenged the Finance Minister to come out clean on details of Rs322bn payments to the IPPs.

He said the finance minister had claimed to have made payments to IPPs transparently and details placed on the web.

“A search of the websites of Ministries of Finance and Water and Power and also of Wapda and Ogra revealed that no such details had been placed. If the information is not placed on the website of the related ministries and departments, where has it been placed. This has raised legitimate questions of transparency and accountability”.

He said that the information available on the website of the Finance Ministry about a July 2 meeting simply says that the ECC was informed that a sum of Rs322bn has been paid to the IPPs. It is a bare statement of fact known to every one, he said.

“What was needed to be disclosed but has not been made public are the details about the power produced by each IPP, the time during which it was produced, the rate at which it was paid and the total amount paid to each power producer,” said Mr Babar.

He said a detailed technical audit of the IPPs was an essential pre-requisite but no such audit was actually carried out before doling out billions to power producers, he said.Who knows if a game of favourites had been played out in the week during which hundreds of billions were paid out, Farhatullah Babar asked.

He said that in order to create an impression of transparency and accountability, the website of the Finance Ministry claims that the IPPs signed MoU pledging to fulfil certain conditions before payments were made to them.

However, on closer scrutiny, it becomes obvious that it is no more than a false impression.