ECC approves discontinuation of Kissan, Zero Rated Industrial packages

ISLAMABAD: The Economic Coordination Committee (ECC) has approved the discontinuation of the Kisan Package as well as Zero Rated Industrial package from March 1, 2023, under the Rs 952 billion Revised Circular Debt Management Plan (CDMP). This has been done on the instructions of the International Monetary Fund (IMF).

The Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar presided over the meeting of the ECC.

Sources said that the energy ministry has informed the ECC that a new iteration for forecasting of power purchases price which is around 90% of total power sector revenue requirement has been carried out and the revised base case circular debt is Rs 952 billion on the latest assumptions for FY 2023.

The main objectives of CDMP consists of reducing circular debt, enabling monitoring of circular debt, cost of electricity, tariff increase, subsidies, PHL markup, settlement of IPP stock/ markup, non payments from K-Electric, DISCOs’ losses as well as recoveries, payment of taxes, governance and monitoring of CDMP.

Sources also said that the energy ministry has projected Quarterly Tariff Adjustment (QTA) From February to March 2023, at Rs3.21/unit, QTA From March to May 2023, at Rs0.69/unit and QTA from June to August 2023,  at Rs1.64 per unit besides improvement of DISCOs’ losses will be minimed to 16.27% through timely tariff increases by end FY 2023.

Moreover, the government will also discontinue Kissan and ZRI packages from March 1, 2023.

Under the package, markup saving due to IPP stock payment will be Rs 11 billion , FCA recovery till June 2023, Rs31 billion, PHL markup surcharge recovery Rs 68 billion, GST and Taxes on collection basis Rs 14 billion, reimbursement from FBR Rs 5 billion and additional subsidy from government would be projected at Rs 335 billion.

Meanwhile, the projected circular debt flow for the year will be Rs 336 billion whereas the revised circular debt projection after stock payments will be Rs 122 billion.

The circular debt stock will be Rs 2374 billion in FY 2023, which includes Rs 765 billion parked in PHL, Rs 1509 billion payable to power producers and Rs 100 billion GENCO’s payable to fuel suppliers.

The CDMP intends to reduce the flow of circular debt to its minimum possible level while the plan also envisages measures to reduce the stock of circular debt by paying off arrears of power producers. 

Power Holding Limited’s debt and a surcharge to recover markup payments

The Ministry of Energy (Power Division) presented another summary on refinancing of Power Holding Limited’s debt and a surcharge to recover markup payments.

The ECC after discussion approved the proposal to recover Rs 76 billion while exempting non-ToU domestic consumers having consumption ≤ 300 units and private agriculture consumers in four months, from March 2023 to June 2023 to recover the markup charges of PHL loans and allowed to impose additional surcharge of Rs 1/unit for FY 2023-24 to recover additional markup charges of PHL loans which are not covered through the already applicable FC surcharge. 

These surcharges will be applicable to K-Electric consumers to maintain uniform tariff across the country.

The ECC also deferred PHL’s principal installments payable in respect of Rs 283.287 billion for a period of two years from the date of execution of fresh facilities. It directed the finance division to issue a Government Guarantee for repayment of principal as well as interest/fees, etc for the fresh facilities of Rs 283.287 billion.

The ECC considered and approved the proposals contained in another summary of the Ministry of Energy (Power Division) regarding recovery of staggered FCA applicable for the months of August and September 2022.

The ECC deferred the electricity bills for the month of September 2022 for commercial consumers in the flood affected areas till the next billing cycle and waived off electricity bills for the months of August and September 2022 for the non-ToU domestic consumers having ≤ 300 units consumption. The ECC also approved an additional supplementary grant of Rs 10.34 billion to cover waiver of electricity bills in the flood affected areas.

Maximum Retail Prices (MRPs) of Paracetamol and others drugs

The ECC considered a summary of the Ministry of National Health Services, Regulations and Coordination on Maximum Retail Price (MRP) of Paracetamol products. It approved the recommendation of the Drug Pricing Committee (DPC) for increase in Maximum Retail Price (MRP) of Paracetamol products and fixed the price of Paracetamol Plain Tablet 500 mg at Rs 2.67 and Paracetamol Extra Tablet 500 mg at Rs 3.32.

The committee considered a summary of the Ministry of National Health Services, Regulations and Coordination and allowed the fixing of MRPs of 18 new drugs as recommended by the DPC. The prices of these 18 new drugs are at the lowest as compared to the prices of the same drugs in neighbouring countries, especially India.    

Yet another summary of the Ministry of National Health Services, Regulations and Coordination was considered by the ECC. It approved the recommendation of the DPC for reduction in MRPs of 20 drugs.

The ECC considered and approved in principle a summary of the Finance Division on Kamyab Pakistan Program and entrusted the State Bank of Pakistan. This was to validate the claims of Wholesale lenders (WLs) after due diligence, due to the non-existence of the Program Management Unit (PMU) at the Finance Division.

The committee also considered another summary of the Ministry of Energy (Petroleum Division) and granted approval for the declaration of commerciality (DOC), Field Development Plan (FDP) and Development and Production lease (D&PL) for the period of five years w.e.f. January 2, 2022, over Jugan Field (Latif Block) to M/s United Energy Pakistan (UEP) Beta.

The ECC also considered another summary of the Ministry of Energy (Petroleum Division) was considered and granted two years extension in renewal in Missa Keswal Development and Production Lease (D&PL) covering an area of 23.43 Sq kms in district Rawalpindi, Punjab w.e.f. April 11, 2022.

Lastly, the ECC approved in principle a technical supplementary grant of Rs 450 million in favour of the Ministry of Defence.