The Economic Coordination Committee (ECC) of the Cabinet on Wednesday approved a surcharge of Rs1.52 per unit from K-Electric consumers, which will be recovered in 12 months.
The meeting of the ECC was held under the chairmanship of Finance Minister Ishaq Dar.
Sources said that the Power Division has requested the ECC to approve a surcharge of Rs1.52 per unit to be recovered in 12 months, in terms of Section 31, Subsection 8 of the NEPRA Act, for the recovery of Rs 24.5 billion. The remaining amount of Rs 250.7 billion may be approved as a tariff differential subsidy.
In addition, the Power Division may be authorized to file a motion before NEPRA for the incorporation of the above in the schedule of tariff determined for the quarter April to June 2022 or incorporated in the latest schedule of tariff being determined by NEPRA for the quarter July to September 2022.
Upon approval by NEPRA, the surcharge, as approved above and collected by K-Electric, shall be remitted to CPPA-G immediately under intimation to the GoP.
The Power Division also asked the ECC to give direction to release and utilize the available budget of Rs79 billion as an advance subsidy from demand no. 33IB no. 9050 during 2023 for onward release to CPPA against KE TDs.
According to the Finance Division, the Ministry of Energy (Power Division) submitted a summary regarding Quarterly Tariff Adjustments of K-Electric and informed that, as per the National Electricity Policy 2021, the government may maintain a uniform consumer-end tariff for K-Electric and state-owned distribution companies.
Accordingly, the KE applicable uniform variable charge is required to be modified to maintain the uniform tariff across the country.
The ECC, after discussion, approved a surcharge of Rs1.52 per unit to be recovered from K-Electric consumers in 12 months.
The ECC further allowed the release and utilization of the available budget of Rs76 billion as payment of arrears under different heads.
Circular Debt Management Plan
Sources said that the Power Division also presented the summary regarding the implementation of the revised circular debt management plan and the utilization of Rs20.726 billion for government-owned power plants.
Considering the unprecedented accumulation of circular debt and cash flow constraints, the federal cabinet, in a meeting dated February 14, 2023, approved the revised circular management plan for the power sector, which encompasses a budget of Rs905 billion to manage the critical cash flow requirements and to curtail the CD flow to the minimum possible level.
This includes Rs 180 billion earmarked in the budgetary allocation for IPPs’ stock payments.
The ECC, in a summary dated October 31, 2022, approved the opening of the Pakistan Energy Resolving Account at SBP with Rs 50 billion allocation to be utilized during CFY 23.
CPPA was allowed to withdraw a maximum of Rs4 billion per month and shall receive Rs32 billion till June 23, whereas Rs18 billion will remain unutilized in the assignment account.
Similarly, after the stock settlement of Uc power, an amount of Rs2.726 billion is available under IPPs’ stock clearance head.
Keeping the above in mind, it would be appropriate to utilize the available balance of Rs20.726 billion for clearing the GPPs’ outstanding liabilities to ensure full utilization of Rs180 billion. As of April 30, 2023, current payables to GPPs stand at Rs 790.455 billion.
The Ministry of Power has asked the ECC to approve a Rs2.726 billion Technical Supplementary Grant for the assignment account from the existing budgetary allocation against the Finance Division.
Release and authorize the Power Division to utilize Rs20.726 billion (Rs18 billion already available in the assignment account plus Rs2.726 billion to be transferred through TSG) in favor of GPPs as per the breakup provided during FY23. Besides, authorize the Power Division to utilize the full amount out of the assignment account in relaxation of the limit of using Rs4 billion per month during June 2023.
According to the Finance Division, the ECC considered another summary of the Ministry of Energy (Power Division) regarding the implementation of the revised circular debt management plan and the utilization of Rs20.726 billion for government-owned power plants. The ECC, after discussion, authorized the Power Division to utilize the one-time full amount out of the assignment account in relaxation of the limit of using Rs4 billion per month during June 2023 for the next five months and to ensure that there will be no more payment liability to IPPs for the period July 2023 to November 2023.
Meanwhile, the Ministry of Commerce submitted a summary regarding the suspension of import conditions contained in the Import Policy Order 2022 related to the import of Timber/Wood and briefed the meeting on the concerns of the wood/timber industry.
The ECC, after detailed discussion, suspended the relevant import conditions from the date of issuance of IPO 2022 to 31st October 2023 with directions to the MoNFS&R to review the import policy and come up with suggestions to settle this issue.
The ECC also considered and approved another summary of the Ministry of Commerce regarding an amendment in relevant clauses in the Import Policy Order 2022 to allow government agencies to import Pharmaceutical raw material.
The ECC also approved another summary of the Power Division regarding the release of Rs56 billion as approved under the revised CDMP against the AJ&K receivables.
The ECC approved a billion of rupee TSG for a number of ministries, including the Ministry of Federal Education and Professional Training, Federal Tax Ombudsman, Ministry of Interior for Repair & Maintenance of Helicopter by Pakistan Rangers, the Directorate General of Immigration and Passports, Intelligence Bureau, Gilgit-Baltistan Council, and Ministry of Housing and Works for the execution of development projects.
