ISLAMABAD: The federal Cabinet has directed that all financial matters related to the energy sector be routed to the Cabinet Committee on Energy for sector-wide strategic decision-making. The directive was issued as the Cabinet ratified an Economic Coordination Committee decision concerning the rationalization of late payment interest and the potential tariff reduction for nuclear power plants including Chashma units and Karachi units. According to informed officials, this move aims to streamline coordination between power and petroleum divisions and strengthen financial governance.
The ECC also approved the issuance of policy guidelines under Section 21 of the OGRA Ordinance 2002. These guidelines will allow the regulator to incorporate more than twenty one billion rupees, already approved by the Cabinet and subject to auditor verification, into the cost of supply for RLNG and system gas. Officials noted that the adjustment is part of the broader financial restructuring linked to circular debt management.
A significant decision during the meeting was the approval for the Central Power Purchasing Agency to pay eighty nine billion rupees to the Oil and Gas Development Company Limited on behalf of Uch Power and Uch II Power. The payment, drawn from the circular debt financing facility, will be made as a lump sum rather than through previously planned monthly installments. Officials described the shift as essential to support OGDCL’s liquidity position and stabilize the upstream supply chain.
These financial interventions form part of a comprehensive rationalization plan tied to the tariff reduction framework negotiated with nuclear power producers. The Prime Minister’s Task Force on power sector reforms conducted detailed evaluations of tariff structures and secured agreements that include the waiver of late payment interest by the Pakistan Atomic Energy Commission up to the end of 2024. The mechanism also revises delayed payment rates under future power purchase arrangements.
The Task Force reported that more than six hundred billion rupees have already been disbursed to government power producers, significantly reducing overdue liabilities. Despite this progress, outstanding obligations of around one hundred fifty billion rupees remain and will be cleared through the circular debt financing facility. Officials also confirmed that the government has used the same facility to retire major portions of Power Holding Limited debt.
Additional reforms include late payment interest waivers from multiple government-owned power companies and the resolution of the long-disputed take-or-pay requirement for RLNG supplies. The ECC endorsed the financial impact of these settlements and approved the incorporation of verified adjustments into RLNG pricing, enabling OGRA to reflect updated cost-of-service calculations. Officials described these measures as critical steps toward stabilizing the energy chain and improving affordability for consumers.
