ISLAMABAD: In a major decision, the Economic Coordination Committee of the cabinet on Wednesday approved an increase in gas tariff for specific commercial consumers and passing of fuel adjustment charges to end-consumers of electricity.
The increase in gas tariff will be applicable to industries, CNG and power sectors, excluding domestic consumers and tandoors. The increase will yield additional revenue of Rs35-Rs40 billion for both gas companies — Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL).
The energy ministry has proposed an increase of Rs50 per mmbtu (million British thermal unit) for all sectors, excluding domestic consumers and tandoors.
However, the ECC, which met under the chairmanship of Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh, did not agree with the ministry’s proposal for flat increase for all sectors, which is subject to Gas Infrastructure Development Cess (GIDC).
Approves Rs19.65bn to initiate process of retrenchment plan in Steel Mills
As per the consensus decision, the GIDC rates on normal gas tariff for the applicable sectors will now be increased by only 33 per cent, which was imposed till August 2020. This will provide extra revenue to the two gas companies to improve their financial health.
The government will have to collect Rs811bn under GIDC. The government has so far received only Rs430bn, while the remaining amount is outstanding. This measure will help the government recover the remaining amount.
The collection of GIDC is also an International Monetary Fund’s condition.
For domestic consumers, the meter rent has been increased to Rs40 from Rs20 per month. The energy ministry had proposed to increase the meter rent to Rs60 per month.
The ECC decided to rationalise the tariff for the power sector’s fuel adjustment charges and quarterly adjustments, which were due for the period from November 2019 to June 2020.
According to the decision, there would have been an increase in power tariff to Rs1.62 per unit, but the ECC also added subsidy to the price for end-consumers that comes to about Rs1.30 per unit. So the net increase to be passed on to the consumers using up to 200 units will be only Re0.32 (32 paisas).
On the request of the energy ministry, the ECC allowed gas/ RLNG supply to five export sectors — textile (including jute), carpets, leather, sports and surgical goods. In order to avoid curtailment of gas to these industries, which are heavily reliant on gas, supply of LNG (liquefied natural gas) will be made available to the industrial sector to ease pressure on the SSGCL system.
Starting from October 2020, gas supplies will be reduced to 50pc on Saturdays and Sundays to the export sector for two consecutive weekends and, possibly the third weekend, in order to build sustainable gas pressure in the SSGCL system. Once this is done, there will be no curtailment on Sundays. The weighted average tariff will be charged at Rs930 per mmbtu till February 2021. From March 2021 onwards, notified domestic tariff will be charged until an alternative mechanism is devised and approved by that time.
PSM retrenchment plan
The ECC also approved an amount of Rs19.65bn to initiate the process of a retrenchment plan in Pakistan Steel Mills in the light of a report submitted by the PSM management to the Supreme Court.
The industries and production ministry submitted to the ECC a summary on the PSM retrenchment plan aligned with the legal framework of relevant labour laws.
The retrenchment plan has been prepared to reduce financial burden on the government and a report on the plan has been presented before the apex court.
The Supreme Court had directed that an amount of Rs11.68bn be deposited with the court to pay off the liabilities of non-litigants who had retired from the PSM till May 18, 2020.
The ECC was informed that 3,978 retired employees were non-litigants.
The ECC reduced the margin of commission of the Trade Corporation of Pakistan on import of wheat and sugar to 0.75pc from 2pc. Hafeez Shaikh said that since the matter of availability of wheat was crucial, there should be an update on the issue as the start of each meeting of the ECC.
He also expressed concern over the different numbers that kept on coming up from different quarters as per the need and availability gap of the commodity. He directed that the food security ministry after consultation with the relevant stakeholders inform the public about the matter with figures on the stock available and being brought into the country from different government and private sector channels to meet any future demand and supply gap.
The ECC allowed in principle the conversion of National Highway Authority’s loans into government grants on the presentation of an operational and corporatisation plan for NHA. The minister for planning and development will oversee preparation of the plan.
The NHA request was approved on the grounds that the projects selected by the authority for execution are not purely on financial viability and those projects, which are executed in remote areas, have very less revenue generation potential, but these are executed as social development projects.
For the management and maintenance of Gurdwara Darbar Sahib in Kartarpur, the ECC allowed establishing a project management unit, with the creation of 126 posts and recurring budget and other costs to make the unit a self-financing body under the administrative control of the Evacuee Trust Property Board.
Published in Dawn, October 1st, 2020