Govt approves 5.15m tonnes wheat procurement, supply of another 150MW to KE

Updated May 16, 2019

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ECC gives Rs1.8bn additional subsidy to ex-Fata tribal agencies for Ramazan. — PID/File
ECC gives Rs1.8bn additional subsidy to ex-Fata tribal agencies for Ramazan. — PID/File

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Wednesday approved Rs158 billion wheat procurement plan and 150MW additional power supply to K-Electric from the national grid.

Adviser to Prime Minister on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Shaikh presided over the meeting that did not approve about Rs118bn electricity subsidy to industrial consumers for want of further deliberations.

Sources told Dawn that the meeting was informed that wheat crop had suffered a setback due to recent rains and thunderstorms and about 5 per cent losses are initially estimated to have been caused to the overall production.

ECC gives Rs1.8bn additional subsidy to ex-Fata tribal agencies for Ramazan

In his presentation, the secretary, ministry of national food security and research updated the meeting about the availability of wheat in the country saying total stocks stood at 5.328 million tonnes as of May 13. It was reported that initial estimates put the total wheat output at 24.268m tonnes during the just concluded crop season against a target of 25.56m tonnes. About 1.213m tonnes were lost due to recent adverse weather conditions.

Some participants were of the view that losses in Punjab appeared to be on the higher side and would be known after 2-3 weeks because crops in many parts were still in the open fields. The meeting was informed that the wheat procurement process was being conducted smoothly by the provincial government (Punjab) and Passco. The committee approved the proposed wheat procurement target of 5.15m tonnes for the 2018-19 crop with financial limit of Rs158.5bn.

The ECC approved additional power supply of 150MW from the national grid to the KE so as to address power shortage in Karachi. An official said the KE would get additional power supply of 150MW for two years at the average basket price at which the Central Power Purchasing Agency (CPPA) was supplying electricity to other distribution companies. The average basket currently stands at about Rs9.89.

Responding to a question, an official said the KE should have been given additional supply from the national grid at marginal cost – significantly higher – but a 2007-08 decision of the federal cabinet became the stumbling block that ordered treatment of KE at par with distribution companies of ex-Wapda. The relevant authorities did not want to follow a lengthy process for amending the old cabinet decision. With this, the KE’s intake from national grid would now stand at about 800MW.

The Karachi-based private power utility is facing about 500-600MW shortfall in peak summer months and had been pursuing the federal government for additional supply from the national grid including from Karachi-based nuclear power plants to meet peak demand and minimise public sufferings. It has been trying to secure about 500MW from the national grid in view of its inability to overcome capacity constraints on its own. The KE would be provided with additional supply through 132kv existing transmission line from three wind power plants in the Gharo area namely Dawood Hydro China, Zephyr and Tenaga (50MW each).

A fresh power purchase agreement (PPA) for two years would be signed by KE with CPPA/NTDC. The initial 2-year PPA would be extendable.

The government has not yet issued national security certificate for the transfer of KE’s 66pc share to Shanghai Electric of China because of over Rs100bn claims of the Sui Southern Gas Company and NTDC/CPPA against the KE while the Karachi-based private utility also had huge claims against various entities of the Sindh government. As a result, Shanghai’s $1.77bn takeover plan of the KE continued to face roadblocks.

An official said the ECC did not formally approve Rs3 per unit subsidy in power tariff to industrial consumers under the prime minister’s package and ordered the power division to have further deliberations with the ministry of finance and the industrial sector before seeking budgetary allocations. The industrial consumers had been enjoying the cheaper rates but the finance division had been reluctant to disburse these funds to power companies because initial allocations lapsed almost a year ago.

In order to provide additional power supply to the seven tribal agencies of ex-Fata, the committee approved additional subsidy amounting to Rs1.8bn to the Tribal Electric Supply Company for Ramazan. The power division informed the meeting that the government had been paying the electricity bills of the domestic consumers of former tribal agencies through subsidy of Rs1.3bn per month.

The ECC also acceded to the Earthquake Reconstruction and Rehabilitation Authority’s proposal by granting tax exemption to the projects being constructed under the Saudi Fund for Development Grant.

On the proposal of the ministry of maritime affairs, the committee waived off demurrage (KPT storage charges) on the consignments of rice to be distributed among the needy people by a non-profit welfare organisations working for the poor and the needy people of the country.

The meeting approved technical supplementary and supplementary grants for different ministries/divisions.

Published in Dawn, May 16th, 2019