ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Thursday approved different summaries for the power sector, including Rs151 billion for saving consumers from monthly and quarterly fuel adjustments, and another Rs66.7 billion out of the economic stimulus package over the next three months.
The ECC also considered the summary of Power Division for approving syndicated term finance loan facility of Rs100 billion for the Power Holding Company for improving liquidity and erasing the monster of circular debt and requested the ECC to invoke an exemption from Public Procurement Regulatory Authority (PPRA) under “Negotiating Tendering” vide rule 42 (d) (iii) due to outbreak of COV-19 and prevalence of emergency.
The ECC also approved summary for appointment of valuator for Pakistan Energy Sukuk Bond-II having worth of Rs200 billion. In totality, the power sector sought financial package of around Rs517.7 billion in the shape of funds from national exchequer, syndicated loan facility and launching of Sukuk Bond.
Out of Rs66.7 billion sought by the Power Division from the stimulus package, they estimated that the lockdown was resulting into reduction in demand as it was expected that over the next three months, the demand would be reduced by 7.4 billion units.
Such demand reduction will lead to non recovery of fixed generation, transmission and distribution cost as generation and transmission fixed cost stood at Rs43.7 billion, distribution fixed cost Rs12.6 billion and due to reduction in cross subsidy in commercial and industrial sector, increase in additional subsidy would be standing at Rs10.6 billion over the next three months.
According to the official announcement, Adviser to the Prime Minister on Finance and Revenue Dr. Abdul Hafeez Shaikh chaired the meeting of the Economic Coordination Committee (ECC) of the Cabinet on Thursday at the Cabinet Division.
The ECC approved four technical supplementary grants for the current financial year including Federal Public Service Commission amounting to Rs160 million, for the achievement of Sustainable Development Goal Program amounting to Rs1,700 million, for Special Security Division (SSD) (South) Phase-I, Rs11,483 million and for Special Communication Organization (SCO), Rs.468.212 million.
A proposal was moved by the Power Division for funding to the power sector from the economic relief package for mitigating the effect of shortfall in the recoveries due to reduced demand of energy and late recoveries amid COVID-19 outbreak.
The ECC approved the appointment of valuator for Pakistan Energy Sukuk Phase II (Rs.200 billion) as the company had already done an extensive exercise of valuation of multiple government assets. On the request by the Power Division for a Syndicated Term Finance Facility of Rs100 billion, the request was referred to Secretary Finance/Chairman PPRA for facilitation on the matter. The ECC approved the deferment of monthly and quarterly fuel adjustments in the electricity bills of the consumers till June 2020. The whole exercise will have a total impact of Rs151 billion on the government.
The ECC also approved making MD SNGPL a member of the Price Negotiation Committee for TAPI (Turkmenistan, Afghanistan, Pakistan, Iran Gas Pipeline). In order to cover up the losses incurred by PSO and oil sector due to devaluation of Pakistani rupee, the ECC in principle agreed to a maximum of 60 days period for the adjustment of exchange gain or loss w.e.f 1-3-2020 and directed the Power Division to resolve the issue in consultation with the Finance Division. On the proposal sent by the Ministry of Energy regarding liquidity requirements of Pakistan State Oil, which has huge outstanding receivables from different government sector organizations and is experiencing slow recoveries due to the ongoing pandemic, the ECC directed secretary finance to consult Power Division and help in the retirement of some of the liabilities of PSO for running its business in this difficult situation. On the Proposal moved by the Ministry of Maritime Affairs, ECC approved the KPT Board Resolution for extension in the existing free period from 5 working days to 15 working days for cargo/containers landing with effect from 25-3-2020 till 30-4-2020.