ECC to consider discontinuation of subsidy on power today

MUSHTAQ GHUMMAN

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet which is scheduled to meet on Thursday (today) will consider discontinuation of Rs 3 per unit subsidy on electricity available to industrial sector, well informed sources told Business Recorder.

The ECC, in its meeting held on June 7, 2017 had approved Rs3/Kwh subsidy announced by the Prime Minister for the industrial sector.

The committee also decided that a mechanism in the form of policy directive to NEPRA for inclusion in base tariff for the purpose of cross subsidy will be worked out for the subsidy beyond claims of June 2017.

It was also decided that retrospective recovery of Industrial Support Packaged (ISP) claims may be made, under mechanism proposed, if any, adjusted in tariff and subsequent claims of subsidy through the same policy directive.

In order to implement the decision, Finance Division was requested by Power Division for retrospective release of ISP claims till June 2017 because, if ISP claims are not released immediately, the sector is not in a position to continue the for the industry as announced by the Prime Minister.

Finance Division, however, in response released only Rs 12.640 billion against the claims of Rs 23.194 billion after netting off of negative Fuel Price Adjustment (FPA) of corresponding month.

ISP in case of KE has yet not been released. New tariff for FY 2015-16 has been approved by the Cabinet and Ministry of Energy (Power Division) is not in position to impose new surcharges in an order to cross subsidized the package on other consumers. Further the new Generation, Transmission and Distribution of Electric Power Bill 2017 has been passed by the National Assembly and Senate of Pakistan. Since, the Bill has yet not attained its assent from the President, it is difficult to frame the mechanism in the form of policy directive to NEPRA for inclusion in the base tariff for the purposes of cross subsidy for working out the ISP claims beyond June 2017.

Power Division has requested the ECC to consider following proposals; (i) payment of ISP claims after cross subsidizing against negative fuel price adjustments may be made till December 2017; and (ii) owing to financial difficulties, the support package may be discontinued after December 2017 till improvement in the financial health of the Sector.

The sources said, Finance Division agreed with the proposals with the addition that in view of fiscal constraints, subsidy under ISP may not be allowed beyond December 2017 and Power Division will accordingly inform the Discos, including KE immediately after approval of the competent forum.

The ECC will also consider the following agenda;(i) LPG air mix projects; re-allocation of funds for LPG mix by SSGCL;(ii) extension in the period of Kandra field development and production lease;(iii) Pakistan Machine Tool Factory (PMTF) requirement of funds for personnel related dues.