ISLAMABAD - AHMAD AHMADANI - At a time when cash-starved government is leaving no stone unturned to generate money by utilising various sources to tackle the circular debt of power sector, Law Ministry has so far turned down summary of Petroleum Ministry seeking its nod over floating Rs70 billion Term Finance Certificates (TFCs) of OGDCL.

Well-placed sources aware of the development informed TheNation that Ministry of Law, Justice and Parliamentary Affaiars has turned down the summary of Ministry of Petroleum and Natural Resources (MP&NR) seeking legal position on floating Rs70billion worth TFCs of Oil and Gas Development Company Limited (OGDCL. This worthy amount ostensibly planned to be generated by issuing TFCs in a bid to pay the hefty outstanding amounts to the independent power plants (IPPs) and PSO on account of circular debt. However, Law Ministry while declining to give its approval over the issuance of TFCS has raised objection that worthy amount of OGDCL could not be issued to the private companies.

It was also learnt that owing to non-payments worth of Rs70 billion to the IPPs and PSO, worries of power sector relating with financial matters would be further worsened in future. President Asif Ali Zardari and economic coordination committee (ECC) of the cabinet gave their approval over the summary of MP&NR to issue TFCs to get rid of soaring circular debt of the power sector of the country. The ECC had approved a debt-swap arrangement under which government was to issue Rs70 billion worth of TFCs to provide Rs18 billion to Independent Power Producers (IPPs) and remaining Rs62 billion to Pakistan State Oil and other fuel suppliers to ease fuel shortage. Initially under the plan, the CPPA was to purchase TFCs at Karachi Inter-bank Offered Rate (Kibor) plus 5 per cent for a period of three years to control the circular debt.

 The TFCs was to be transferred to OGDC's reserves and the amount of Rs70 billion could be paid to Pakistan State Oil (PSO) and IPPs. PSO would then release the money to refineries to reduce its dues. Later, the refineries were expected to clear the dues of OGDCL. This measure was taken by the cash-starved government to end power woes of the masses and the power crisis of the country as well.