ISLAMABAD: The government on Wednesday approved more than Rs93 billion worth of financing plan, mostly through loans, for the energy sector to avoid loadshedding and 6.1 million tonnes of procurement target for wheat season 2017-18.
The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet that also noted that there were no sellers for public sector sugar stocks at official rates as farmers suffered. The meeting was presided over by Prime Minister Shahid Khaqan Abbasi.
A senior official said the ECC decided to raise Rs80bn on behalf of Power Holding Pvt Ltd (PHPL) of the Power Division through term finance certificates and issue Rs13.13bn worth of sovereign guarantee for evacuation of full electricity from 1,320MW coal-based power plant at Hub.
Interestingly, a significant chunk of the new loan worth Rs25bn would go for the debt servicing and interest payments and remaining Rs55bn would be channelled to the entire power and oil sector.
ECC okays wheat procurement and three-month salary for PSM workers
The official said the government was under extreme pressure for payments from the independent power producers (IPPs) and warned about their inability to ensure uninterrupted power production in upcoming summer when the government’s claims of ending loadshedding would get the real test.
Therefore, the largest chunk of about Rs35-40bn would flow to the IPPs to address their financing challenges for ensuring smooth power supplies while remaining Rs15-20bn may reach gas companies and Pakistan State Oil whose total receivables had reportedly gone beyond Rs335bn including Rs285bn from power sector alone.
An official statement said the approved plan to settle power sector payables “will ensure that government-owned companies including PSO, SSGPL, SNGPL, Gencos, Discos and nuclear power plants continue to operate normally”. The government will also settle outstanding dues of IPPs after reconciliation and pre-audit in the prescribed manner to ensure transparency.
The ECC also approved procurement target of 6.1 million tonnes of wheat for the year 2017-18.
The meeting reviewed progress on its directive to the Trading Corporation of Pakistan (TCP) to procure 0.3 million tonnes of sugar from sugar mills and reiterated that the decision was taken to facilitate sugar mills for timely procurement of sugarcane and to ensure payments to the farmers at prescribed rates.
“The meeting was informed that no bid was received against the TCP tender for procurement of sugar at Rs48 per kg”, an official statement said.
The ECC accorded approval to a proposal to link price of JP-8 petroleum product with ex-refinery price of JP-1.
The ECC also approved three months salary (October to December 2017) for the employees of Pakistan Steel Mills (PSM).
The meeting also decided to pay about Rs500m to two leading oil marketing companies — PSO and Shell Pakistan — to clear compensation claims which had been pending since April 2015 and would add a cost to consumers.
The meeting was told that Federal Board of Revenue (FBR) had imposed 2.5pc regulatory duty on imported high-speed diesel (HSD) and 2pc on petrol and petroleum crude oil on April 30, 2015 but the notification got delayed for a few days.
Despite the fact that oil marketing companies (OMCs) paid regulatory duty during the month of May 2015, resultantly respective OMCs could not recover such arrears from subsequent monthly prices. A July 8, 2015 meeting of the ECC allowed this be charged to consumers subject to reconciliation of claims on the basis of actual volumes of products from FBR, Ogra and the petroleum ministry.
The subject remained under controversy on various counts and it more than two years to reconcile volumes and related data. Accordingly, Ogra has now verified the requisite claim and prepared a verification report based on the information provided by FBR for submission to the ECC.
The petroleum ministry has now submitted that it “transpired from the said report that Ogra after carrying out verification, worked out net claim of Rs482.13m” including Rs357m payable to PSO and Rs125.22m to Shell which could not be recovered by OMCs through monthly prices of May 2015.
The ministry has now requested the ECC to allow the recovery of said amounts through the coming month’s petroleum prices and be paid to OMCs under the existing pricing mechanism in succeeding months through Ogra. The crude would now be charged two paisa per litre, HSD 10-12 paisa per litre and petrol about 10 paisa per litre.
Published in Dawn, March 8th, 2018