ECC approves sovereign guarantee for power sector

Defers Rs1b subsidy for the poor

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The Economic Coordination Committee of the Cabinet (ECC) on Monday approved sovereign guarantee for the syndicated term of finance facility for the power sector, while it deferred decision on a subsidy of Rs 1 billion on 11 essential items at the state-run utility stores till special audit of sale purchase was produced for the review of the committee.

The Minister for Finance, Ishaq Dar, chaired the meeting. Secretary Water and Power Younis Dagha gave a presentation on the performance of power sector for the years 2014-16.

According to sources, the facility would be used to take loan from the commercial banks to clear the due instalments of the fuel suppliers, PSO. The power sector dues for furnace oil have increased to over Rs 228 billion, while Rs 6 billion are payable for LNG supplies.

The Ministry of Petroleum has already approached the Prime Minister to force the Ministry of Water and Power to clear the dues of PSO in a timely manner, which could otherwise default on its international LCs. The Prime Minister has ordered the resolution of the issue to run the power plants at the optimal level during the coming summer season, the source added.

An official statement said that the meeting considered the proposal from the Ministry of Water and Power and accorded approval for issuance of sovereign guarantee in respect of syndicated term finance facility for the power sector. Another proposal by the Ministry of Water and Power on the withholding of tax on dividend for HVDC Transmission Line from Matiari to Lahore was deferred for inter-ministerial discussion and re-submission to the ECC thereafter.

Secretary Water and Power said that keeping in line with the vision of Prime Minister Nawaz Sharif, all possible efforts had been made for the development and strengthening of the power sector. He said that efforts were afoot towards achieving zero percent load-shedding. With concerted efforts, there has been a considerable decrease in load shedding across the country. In urban areas load shedding had decreased from almost 12-14 hours in 2013 to 4 hours in Dec 2016. For industrial consumers the load shedding has become zero.

He said during the last two years, the recovery rate was as high as 93 per cent which had benefited the national exchequer by Rs 93 billion. The transmission and distribution losses had been brought down to lowest ever, 17.80 percent by 2016, again benefiting the exchequer by Rs 23 billion. The ATC losses stood at 23 percent in 2016, unprecedented not only in Pakistan but also in the region and this saved an amount of Rs 116 billion for the nation.

The ECC appreciated the performance of the Ministry of Water and Power and directed the ministry to ensure the completion of remaining development and reform initiatives as per timelines.

The meeting had a detailed discussion on the proposal by the Ministry of Industries and Production for a release of Rs 1 billion to Utility Stores Corporation (USC), on account of maintaining subsidised prices of 11 essential items. The chair with consensus of the house deferred the matter of release of funds and directed for a special audit of the sale-purchase prices of certain items, with 15 days to determine the need of release for the amount of subsidy.

 

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