ISLAMABAD: The Economic Coordination Committee (ECC) of the federal cabinet on Monday reviewed a summary presented by the Ministry of Industries and Production and approved a Rs75 billion relief package for small and medium-sized enterprises (SMEs) and unemployed labourers across the country.
The ECC meeting was chaired by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh.
Under the approved ‘Chota Karobar Imdadi Package’ package, the federal government will pay the electricity bills for small businesses for the months of May, June and July.
Later addressing a press conference in the federal capital, Federal Minister of Industries and Production Hammad Azhar also briefed the media about the package for labourers laid off during the coronavirus lockdown.
He said that Rs75bn have been allocated for the package. “The government wants to help smaller businesses affected by the lockdown and so it is introducing this scheme to ensure that it can facilitate them as much as possible,” he said.
According to him, under the announced package, at least 3.5 million small businesses will be given relief. Businesses with 5KW connections and industries with 70KW connections will not have to pay their bills for three months. The government was going to approximate their energy usage for the months of May, June and July, when they resume operations, and pay their bills in advance.
“The sums deposited in their bills will stay valid for utilisation up to six months. The sum will be based on actual consumption and total payments made from the meter in the May, June, July 2019 period combined,” he said.
The minister said that this would help reduce burden on 95 per cent commercial connections and 80 per cent industrial connections. “These are two schemes we have brought in,” he said, adding that they will now work on a third scheme — a financial aid package for small businesses.
He also said that these schemes will be put before the cabinet on Tuesday for approval.
Azhar clarified that the scheme will apply to commercial and industrial meters, both registered and unregistered. He called it a policy instrument to reach the maximum number of sectors. Sector specific policies will be in the next phase, he explained.
According to a statement issued later by the Ministry of Finance the ECC of the federal cabinet has approved a Rs50.69 billion package to provide indirect cash flow support to the small and medium sized enterprises through pre-paid electricity.
Under the Rs50.69 billion package prepared by the Ministry of Industries and Production with active consultation with Small and Medium Enterprises Development Authority (SMEDA), approximately 95 per cent commercial consumers with connected load up to 5 KW and 72 per cent of industrial consumers with connected load of up to 70 KW would be provided financial support.
Under the scheme, commercial consumers would be given support up to Rs100,000 and industrial consumers up to Rs450,000 for three months. The base period for estimating electricity consumption would be May-July 2019 and for meters for which electricity consumption data is not available for the full base period, appropriate average will be used.
To avail this facility, pre-paid electricity bills of three months or total bills during the base period would be required. The period of consumption of the extended financial support would be six months starting from May/June 2020.
Azhar announced that Rs12,000 will be doled out to four to six million families, which were not counted under the Ehsaas Emergency Cash Programe. He said that labourers and daily wagers can get themselves registered by accessing the portal and filling the requisite information there. He said that this process is much easier and the eligible people would be finalised after applying.
Responding to a query, he said that his government was also considering other vulnerable segments of the society for further reliefs in near future.
This is the third relief package introduced by the incumbent government after the shutdown of business units and lockdown across the country following the coronavirus outbreak to support the affected sectors and public.
Earlier, on March 30, the government had announced a general Rs1.2 trillion Economic Relief package to mitigate the adverse impacts of coronavirus pandemic on various sectors/classes of society.
On April 4, Prime Minister Imran Khan had also announced an incentivised package for the construction industry in order to increase employment opportunities in the country in the wake of the coronavirus outbreak. Under the incentive package, it was announced that those who would invest in the sector would not be asked questions about their source of income.
Meanwhile, the ECC on Monday also approved a credit loss subsidy of Rs30 billion for the Risk Sharing Facility for State Bank of Pakistan’s (SBP) Refinance Scheme to support employment and prevent lay-off of workers.
Under the scheme, financing would be extended to businesses with maximum sales turnover of Rs2 billion while the government would bear 40 per cent first loss on distributed portfolio (principal portion only) for eligible borrowers, in case of repayments, after being classified as “loss” as per classification criteria under the respective SBP Prudential Regulations. The banks and DFIs assigned limits under SBP scheme would be eligible executing agencies.
The ECC also allowed Rs2.5 billion block allocation to Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (GB) for disbursement through special arrangement. It further instructed the Ministry of Industries and Production to bring up similar relief packages for the agriculture sector, including agricultural tube wells, as well as transporters and the microfinance sector.
On a proposal of Ministry of Economic Affairs, the ECC also accorded in principle approval to the external debt restructuring of the government by availing the G20 debt relief and engaging with bilateral donors for individual debt suspension with the proviso that agreements to that effect could be subsequently brought to the ECC for approval.
On another proposal of the Ministry of Defence, the ECC also approved allocation of additional funds in the form of technical supplementary grant to the tune of Rs3.02 billion for the fencing of Pakistan-Iran border.
