ECC may approve withdrawal of subsidy on HSD by power sector

The Federal cabinet’s Economic Coordination Committee (ECC) scheduled to be held on Wednesday is likely to approve the withdrawal of subsidy on the consumption of high-speed diesel (HSD) by the power sector.

As per details, the ECC meeting is scheduled to be held on Wednesday under Federal Minister for Finance Miftah Ismail to consider a 13 point agenda of various divisions and ministries which include cabinet, defence, foreign affairs, housing & works, information technology & telecom, interior, Kashmir Affairs & Gilgit-Baltistan, petroleum, and revenue.

According to a copy of the ECC agenda, the ECC meeting will consider a summary of petroleum division seeking withdrawal of subsidy on the consumption of diesel (High Speed Diesel) by the power sector.

According to sources, diesel prices in the international oil market have surged to a record high level and the petroleum division, through a summary, has proposed the ECC to give an end to the subsidy on the consumption of diesel by the power sector as this sector can use alternate fuels for power generation purposes.

“Withdrawal of subsidy on the consumption of diesel by the power sector can reduce the fortnightly import of high-speed diesel by approximately 10,000 million tons,” said sources.
They added that by abolishing the subsidy on consumption of diesel by the power sector can reduce the burden of Price Differential Claims (PDC) of Oil Marketing Companies/ refineries by Rs712 million on the national exchequer as the government had allocated approximately Rs218.22 billion for making payment of PDC to the oil marketing companies /refineries through supplementary grant for the period of March 1 to May 31, 2022.

It is relevant to note that the former government of Imran Khan in order to provide relief to the consumers had earlier decided to keep the oil prices stable till the end of current financial year, effective from March 1, 2022. However, this decision of the government had resulted in the generation of heavy Price Differential Claims of Oil Marketing Companies/refineries.

It is also learnt from the ECC agenda that the meeting will consider cabinet division’s summary seeking technical supplementary grant (TSG) of Rs125,819,029 for various requirements of 6 Aviation Squadron, Cabinet Division (custom duties and payment of clearing agent). Similarly, the meeting will also consider payment of Rs40 million to the Ministry of Defence for the media publicity campaign by NCOC through a technical supplementary grant. Likewise, the ECC meeting is expected to approve a technical supplementary grant to the Ministry of Defence to meet the critical shortfall owing to the enhancement of the rental ceiling of accommodation under Demand No. 28 & 29 FY22.
The meeting is likely to further consider the request of the Ministry of Foreign Affairs for additional funds to meet the shortfall in the annual budget of the ministry for the Financial Year (FY 2021-22.

The meeting is likely to approve the allocation of additional funds to the Ministry of Housing & Works for the repair and maintenance of the Minister’s Enclave, Islamabad.

The ECC agenda also includes a request for allocation of technical supplementary grant to the Ministry of Information Technology and Telecommunication for Special Communications Organization (SCO) during current FY 2021-22.