ISLAMABAD - The government is entering into an agreement with the Asian Development Bank (ADB) to settle once for all the troubling circular debt of energy sector that is one of the major causes of unending loadshedding in the country. Sources in the Ministry of Water and Power and Pakistan Electric Power Company (PEPCO) told TheNation that the ADB would provide Rs 130 billion soft loan to enable the government to clear the remaining circular debt. The PEPCO had floated term finance certificates (TFCs) of billions of rupees in April 2009 to a consortium of 10 local banks to pay a part of ballooning circular debt. It was because of the TFCs that Minister of Water and Power Raja Pervez Ashraf had announced that government had given Rs 80.15 billion to PEPCO and that injection of the amount would help generate 1,000 megawatts of additional electricity. The amount was paid to four independent power producers (IPPs) and three oil and gas suppliers. The sources said the PEPCO paid Rs 78.3 billion to four IPPs including HUBCO, Rs 35.458 billion, KAPCO, Rs 31.868 billion, AES Lalpir, Rs 5.699 billion, and AES Pak Gen, Rs 5.3 billion. The PEPCO also paid Rs 1.824 billion to three oil and gas companies which encompassed SSGC, Rs 1 billion, Shell, Rs 0.45 billion, and PARCO, Rs 0.374 billion. In turn, the IPPs were expected to pay Rs 44.39 billion to the PSO, which was to transfer Rs 24.1 billion to the refineries. Of this amount, PARCO got Rs 22.3 billion and PRL Rs 1.8 billion. Under these circumstances, the sources added, the government was left with no option but to seek credit from the ADB, which had agreed to provide the loan subjected to some conditions including formula for controlling line losses, guarantees for recoveries of power dues from consumers and synchronisation of figures. The Ministry of Water and Power is preparing the summary for the purpose for submission to ECC and then to the federal cabinet for approval. The government has also decided not to pay back the amount it generated through TFCs form banks and would seek one-year extension in repayment due to financial constraints. The sources revealed that local banks were willing to arrange necessary funds to help government pay back the entire circular debt but the offer couldnt be availed due to legal curbs under Debt Limitation Act that barred the government to go beyond a certain limit of debt acquisition in one-year. It may be mentioned that the circular debt is considered as one of the main reasons behind the ongoing power outages and the IPPs are finding it difficult to utilise their full capacity for power generation in the absence of financial resources.