ISLAMABAD: The Central Power Purchasing Agency-Guaranteed (CPPA-G) will pay Rs 89.5 billion to the Oil and Gas Development Company Limited (OGDCL) on behalf of Uch Power Limited (UPL) and Uch Power-II (UPL-II) from the government’s circular debt (CD) financing facility, sources revealed.
The payment, initially scheduled in 18 equal monthly instalments, will now be made as a lump sum, in line with recommendations from the Task Force on Power Sector Reforms established by the Prime Minister on August 4, 2024. The move aims to ease liquidity pressures on OGDCL and expedite financial settlements within the energy supply chain.
This development stems from the Economic Coordination Committee (ECC)’s approval of a Power Division summary on “Rationalisation of LPI and Tariff Reduction for Nuclear Power Plants (NPPs)” — including Chashma-1 to 4, K-2, and K-3 — which outlines comprehensive measures to address circular debt and improve cost efficiency in the power sector.
As of July 31, 2025, the government had disbursed Rs 614.92 billion to government power producers (GPPs), including nuclear plants, while outstanding liabilities stood at Rs 150 billion. CPPA-G has also been authorised to utilise proceeds from the Rs 1,275 billion CD financing facility to settle power sector debts and repay Power Holding Limited’s (PHL) obligations.
In addition, the Federal Cabinet approved the waiver of Rs 54 billion in late payment interest (LPI) by OGDCL for UPL and UPL-II up to December 31, 2024. Considering OGDCL’s liquidity situation and the available financing, the Task Force recommended that the Rs 89.5 billion principal payment be made in one go rather than in instalments.
The Cabinet has also approved Rs 119.53 billion in total LPI waivers across various government power producers, including Haveli Bahadur Shah, Balloki, and Quaid-e-Azam Thermal Power Plant, as part of efforts to rationalise dues and improve financial discipline in the power sector.
The Power Division has sought ECC’s approval to formalise Memoranda of Understanding (MoUs) with the Pakistan Atomic Energy Commission (PAEC), authorising CPPA-G to execute Negotiated Settlement Agreements (NSAs) and amend relevant power purchase agreements (PPAs). The agreements include provisions for tariff rationalisation, debt adjustments, and policy facilitation for nuclear power plants, marking a major step toward stabilising the financial ecosystem of Pakistan’s energy sector.
Story by Mushtaq Ghumman
