Govt moves to take over Rs800bn power sector circular debt

Updated 07 May 2020

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The ECC meeting was presided by Adviser to PM on Finance and Revenue Dr Abdul Hafeez Shaikh. — PID/File
The ECC meeting was presided by Adviser to PM on Finance and Revenue Dr Abdul Hafeez Shaikh. — PID/File

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Wednesday expressed concerns over slow procurement of wheat by the public sector and set in motion shifting of over Rs800 billion power sector circular debt to public debt to honour commitments with the international lending agencies.

The meeting, presided by Adviser to PM on Finance and Revenue Dr Abdul Hafeez Shaikh also approved a total of five supplementary grants worth Rs2.492bn. Major part of these grants pertained to Rs2.1bn funding to Inter Services Intelligence including Rs1.665bn for upgradation of Special Telecom Monitoring Project and a Rs500 million for construction of a Special Education School at the Defence Complex Islamabad.

The ECC was also informed that wheat production was feared to fall nine per cent below of the target set for this year and total production was now estimated at about 25m tonnes. Some participants expressed concerns that procurement by public sector was not up to the mark. Relevant officials told the meeting that Sindh Government appeared to be behind target and so was the case with Balochistan while harvesting in Khyber Pakhtunkhwa was usually behind rest of the provinces for climatic reasons.

ECC directs food ministry to achieve wheat procurement target

An official statement said the ECC asked the Ministry of National Food Security and Research (MNFSR) to closely monitor the wheat procurement process and actively engage with food departments and the Pakistan Agriculture Storage and Services Corporation (Passco) to ensure wheat procurement target of 8.25m tonnes is achieved by the public sector this year.

The meeting also directed the food ministry to submit a detailed report in the next two to three weeks on the progress of wheat procurement by Passco and provincial food departments and overall wheat production in the country with the help of reliable data and figures to have a clearer picture for better planning in future.

The ECC also called for exploring possibilities to allow more time to flour mills to procure wheat from the market, allowing inter-provincial movement and preventing smuggling of wheat outside the country. One of the members told the meeting that restriction on movement of wheat in the country was a violation of the Constitution but there was a need to keep a close watch to curb wheat smuggling.

It was also noted that there was no need at all for wheat imports as 500,000-600,000 tonnes had been carried forward.

The discussions followed a report by the MNFSR, which said that wheat procurement target for 2019-20 was set at 8.25m tonnes with 4.5m tonnes to be procured by Punjab, 1.4m by Sindh, 0.4m by Khyber Pakhtunkhwa, 0.1m by Balochistan and 1.8m tonnes by Passco.

However, so far, Passco and the provincial food departments had procured only 3.96m tonnes, approximately 48pc of the total target while the procurement pace was slow in KP and Balochistan.

The ECC also took up another proposal by the MNFSR for fixing an intervention price for cotton at Rs4,224 per 40 kg which was opposed by some members at the meeting who deal with the export sector on the grounds that it would affect export competitiveness. After a detailed discussion, the ECC asked the ministry to come up with a comprehensive package focusing on cotton seed research, overall research and development, better water management, deregulation of the sector and zoning of crop growing areas to enhance productivity and competitiveness of the local crop.

On another proposal by the Power Division, the ECC approved shifting of the most expensive loan from the books of Power Holding Company (PHL) to the government. The government has agreed to shift the entire Rs807bn PHL debt to public debt in three years for a realistic representation of overall public debt and liabilities.

In addition, on a proposal by the Ministry of Energy for development of a criterion for disbursement of payments to the tune of Rs300bn through Central Power Purchasing Agency to the power generators, the ECC asked the Power Division to devise the requisite criterion for fair and equitable disbursement of payments.

On another proposal by the Power Division, the ECC gave go-ahead to issuance of new sovereign guarantee by the Ministry of Finance in respect of fresh syndicated term-finance facility for Rs41bn through the PHL to set off existing PHL finance facility of Rs41bn executed in pursuance of the ECC decision made on June 7, 2017.

On a proposal by the Ministry of Interior, the ECC also allowed Capital Development Authority, Islamabad to loan Rs3.05bn to the Metropolitan Corporation Islamabad for payment of obligatory expenses for the second half of the FY2019-20.

The ECC also allowed reconstitution of a committee for examination of incentive packages for the National Electric Vehicle Policy by nominating the Minister for Industries and Production Hammad Azhar in place of Abdul Razak Dawood as chairman following the cabinet reshuffle.

The ECC also considered and approved a proposal by the Ministry of Maritime Affairs for extension of free period from five working days to 15 for cargo and containers landing for period up to May 31 on account of the coronavirus.

The ECC also approved another proposal by the Ministry of Maritime Affairs for technical supplementary grant of Rs58m as compensation of the demolished structures of the Pakistan Coast Guards in order to provide 19 acres land, previously in possession of Pakistan Coast Guards and vacated for Gwadar Free Zone and Right of Way of the Eastbay Expressway.

The ECC, on a proposal by the Petroleum Division, asked the Finance Division to transfer Rs11.7bn in the National Bank of Pakistan account for ensuring remittances to Kuwait as per schedule.

Published in Dawn, May 7th, 2020