ISLAMABAD - The IPPs are likely to stop operations in next couple of days as the circular debt has reached Rs 526 billion and the government is unable to pay an approved payment of Rs 80 billion after the auditor general’s refusal to conduct the pre-audit of the amount.

“We have contacted the auditor general of Pakistan for pre-audit of Rs 80 billion, an amount the government wants to pay for returning the circular debt, but they have told us that they can’t do it,” official sources told The Nation here Wednesday.

Now it is not possible for the government to pay the money to the IPPs, as a result of which they will stop operation, triggering electricity shortage in the country, the source said.

It is pertinent to mention here that soon after taking over in 2013, the incumbent government had paid off Rs 480 billion circular debt, but the auditor general of Pakistan termed the payment illegal, saying it was cleared without pre-audit.

Since the auditor general office has raised objection to the previous payment, the Power Division, through a letter, asked them for the pre-audit of the payment, official sources said.

The letter was written following approval of the payment by the Economic Coordination Committee of the Cabinet. Earlier, this month the ECC approved the circular debt settlement plan.

After remaining stable for initial couple of years, the circular debt has once again bubbled to Rs 526 billion. The government moved a summary to the ECC for brining the circular debt to the acceptable level of Rs 320 to Rs 380 billion.

The ECC approved a plan to settle power-sector payables which will ensure normal functioning of the government-owned companies, including PSO, SSGC, SNGPL, Gencos, Discos and nuclear power plants.

As an immediate measure, it was decided that Rs 80 billion commercial loans will be raised through Power Holding Private Limited (PHPL) and used in retiring the debt. The decision was taken by ECC as the government wants to pay 50 percent of total overdue amount and wants the IPPs to run in full capacity till September 2018.

When contacted, a spokesman of the auditor general said the government has written a letter to the wrong place as auditor general does not conduct pre-audit as it is the duty of the accountant general department. “We are doing auditing by the end of every financial year,” he added. However, he said their objection to the circular debt payment in 2013 was not about corruption, but it was told by the then auditor general that proper procedure was not followed.