Govt freezes Rs96bn PIA liabilities to CAA

Updated March 21, 2019

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In this file photo, a PIA aircraft is seen on the runway at Manchester Airport.
In this file photo, a PIA aircraft is seen on the runway at Manchester Airport.

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Wednesday approved Rs17 billion supplementary grants and decided to treat Azad Jammu & Kashmir (AJK) at par with provinces for payment of dues on hydropower generation.

Presided over by Finance Minister Asad Umar, the ECC also froze Rs96bn worth of liabilities of Pakistan International Airlines (PIA) payable to the Civil Aviation Authority (CAA) and approved a $3 million supplementary grant for maintenance of an aircraft for the prime minister.

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The committee was briefed by the Water Resource Division on the proposed arrangement for settling the electricity tariff and water usage charges issues with AJK. Secretary Water Resource Division said a detailed arrangement covering all aspects of the issue had been worked out in consultation with the government of AJK. Under the new arrangement, AJK would be given a dispensation similar to the provinces, according to a statement.

The federal and AJK governments would formally sign an agreement over the next few days under which the latter would set up its own distribution company (Disco) on the pattern of 10 other Discos operating in four provinces and would be charged a bulk tariff at around Rs6 per unit like K-Electric by the Central Power Purchasing Agency (CPPA).

The ECC endorsed the proposal of a special committee to pay Rs1.10 per unit water use charges to AJK (instead of existing rate of 15 paisa per unit being paid against Mangla Dam’s power generation) to ensure applicability of the principle of equality and fairness as the two provinces — Khyber Pakhtunkhwa and Punjab — were being paid Rs1.10 per unit net hydel profit under Article 161 of the Constitution.

Also approves $3m for maintenance of prime minister’s aircraft

Officials said the new arrangement would generate Rs10-12bn for AJK per annum on the basis of current power generation and keep on increasing as more power plants come into production. Instead, the federal government would not provide subsidy to AJK on power supply in future but would take over the past arrears that have been built up to over Rs90bn because of a special tariff arrangement.

The officials of the Ministry of Water Resources and the Minis­try of Energy, Power Division, however, were unclear how the Disco would be created and charged a special rate given the fact that these companies re­quired licence from the National Electric Power Regulatory Authority (Nepra) while AJK was outside its regulatory jurisdiction.

A senior official of the Power Division said the AJK government would perhaps follow ­special rates worked by Nepra through their internal ­arrangement.

The matter would now be placed before the federal cabinet over the next few days for formal approval before its implementation and signing of an agreement between the governments of Pakistan and AJK. This will result in an additional cost of Rs10bn to electricity supply that would be charged to consumers throughout the country. The Ministry of Energy would facilitate the relevant company — CPPA — to secure regulatory approval for an increase of 11 paisa per unit consumer end ­tariff by the Nepra.

PIA finances in trouble

The ECC was presented a troubled financial position of the PIA as usual. It was reported that the national flag carrier was in default of Rs96bn to CAA. Informed sources said the government had already exceeded its guarantee limits for the current year and hence decided to freeze these liabilities along with late payment penalty until June 30.

A financial rescue package for PIA would be prepared in the meantime so as to enable the federal government, if required, to inject budgetary support or issue fresh guarantees for loans rollovers with the start of the next fiscal year.

The ECC also approved a series of supplementary grants totaling Rs17.052bn. This included a demand of the Cabinet Division to release technical supplementary grant of Rs14.844bn for current fiscal year. The ECC also approved another supplementary grant of Rs1.795bn on account for Temporarily Dislocated Persons from North Waziristan in the wake of Operation Zarb-i-Azb.

Informed sources said the ECC also approved a request of the Ministry of Interior to transfer $3million worth of technical supplementary grant to the ministry of defence for the maintenance of PM’s Cessna aircraft.

In order to meet the expenses of Capital Administration and Development Division (CADD), the ECC approved technical supplementary grant of Rs202.637m for and Rs12.409m for Pakistan Chairs Abroad.

Similarly, the committee also approved supplementary grant of Rs156.327m for Ministry of Health Services, Regulation and Coordination and Rs41.671m for Ministry of Overseas Pakistanis and Human Resource Development.

The committee was also briefed by Ministry of Science and Technology on the status of operationalisation of Pakistan Hilal Authority. The committee directed that Prime Minister’s Adviser on Institutional Reforms and Austerity Dr Ishrat Hussain should review the matter of placement of the Hilal Authority under the most relevant ministry.

The committee also accorded approval to the proposal of Ministry of National Food Security and Research to extend the export period of surplus wheat from Pakistan Agri­cultural Storage and Services Corporation (Passco) stocks for two months. The ECC had earlier allowed 500,000 tonnes of wheat export out of Passco stocks latest by April 30. The deadline has now stands extended to June 30. The committee also approved the proposal of Ministry of Industries and Production to allocate 66mmcfd additional Mari Deep Gas to Private Power Infrastruc­ture Board for power generation purposes.

Published in Dawn, March 21st, 2019