ISLAMABAD, July 24: The government will extend Rs15 billion each to Wapda and KESC as part of the subsidy to help remove their losses.

The Economic Coordination Committee of the Cabinet (ECC) which was presided over by Finance Minister Shaukat Aziz here on Wednesday was informed about the decision of the government to provide a total of Rs30bn subsidy to both the state run organizations.

The meeting was further informed that the KESC’s past losses of around Rs93bn have been converted into government equities to make it viable for privatization.

According to an official announcement both Wapda and KESC are being compensated from the government ex-chequer to provide cost effective services to their customers. In return, payment of these subsidies add to government spending which are funded by debt.

The ECC was informed that the state subsidies as well as conversion of loans into grants of Wapda were to the tune of Rs51bn during the year 1-9-1999 to 2000. The figure reduced to Rs18.5bn for the financial year 2000-2001.

The meeting noted that the payment to IPPs are at peak costs which puts further pressure on tariffs. This process would continue for another two years and then reduce gradually. The meeting noted that next year the commissioning of Ghazi Barotha hydro power project would substantially reduce the cost of electricity generation which in turn would help stabilize electricity charges as there would be reduced dependence on oil fired generation, which due to rise in international oil prices hit electricity tariff. To promote healthy competition for power generation, the meeting discussed possibility of more self-generation by consumers.

The ECC discussed in detail the impact of prices of ghee and decided to promote domestic oil seed production to off set current dependence on imported soya been and palm oil. Tariffs have been adopted so that it is more attractive to grow oil seed domestically.

The meeting noted that on an average the prices of essential commodities were stable. Ample stocks of wheat, oil, ghee, cooking oil, rice and sugar were available.

The ECC welcomed the decision of the president to provide relief to common man against Nepra decision. The meeting, while endorsing decision of the president, decided to quarterly review the performance of Wapda. This mechanism would provide an opportunity to oversee further improvement in reducing line losses and performance.

The ECC noted that during 2001-02, the rate of inflation measured through CPI was 3.54 per cent as against 4.41 per cent in 2000-01 and 3.58 per cent in 1999-2000. The SPI, during the year increased by 3.37 per cent as against 4.84 per cent in 2000-1 and 3.58 per cent in 1999-2000.

It further noted that during the week ending July 18, average prices of 17 items registered increase, of 10 decreased and of 24 items remained unchanged.

The ECC further noted that prices of Basmati rice, Masure Pulse, Moong Pulse, sugar, tomatoes were lowest in the region.

To promote even more enabling environment between workers and management, the ECC complimented ministry of labour and manpower for taking the following administrative steps:- * The self-assessment scheme introduced in EOBI and Provincial Employees Social Security Institution (PESSIs) in 2001 has been revised. It has now been decided that the employers opting for self-assessment scheme will be required to pay Rs210 per month per worker under Social Security Scheme and Rs150 per month per worker under EB Scheme. * Under the new dispensation, to the expiry of two-year period if the Employer wishes to continue on this scheme his record will be checked by no less than an officer of deputy director level of EOBI. No question will be asked about the number of employees etc., for the previous period. * There will be no inspection by the EOBI and PESSIs staff, opting for self-assessment scheme during the period of two years. * Under the ordinary scheme the number of inspection will be restricted to only one in a year which will be notified to the establishment in advance and the inspection will not be carried out by a person less than as Assistant Director. * The checking of the record under ordinary schemes will be restricted to last two years only. * An amnesty scheme has been introduced. Employers, who wish to register under the EOB scheme, both ordinary & self=assessment, on their own, will be allowed to register with EOBI without being asked to pay the dues for the previous period.

The government of Sindh and Punjab have reduced the number of inspection by the provincial departments for 44 to 6 only. These inspections will be carried out on one day and an advance notice will be given in this regard. The governments of NWFP and Balochistan were requested to enforce similar inspection regime.

The ECC also approved recommendations of the Anomaly Committee. The entire anomaly review process will be completed by July 30, 2002.

To encourage import substitution, promote indigenization and achieve self-reliance, ECC decided to encourage local engineering industry to preferably procure only those items that are manufactured locally; in case of international tenders (if floated), public sector enterprizes and corporate entities will ask for prices for proper comparisons with the locally manufactured products; in case of those international tenders, where the price is quoted on fob basis the landed cost factor would be determined by a committee with members from Planning Commission (Financial Analyst), representative from finance division and nominee of finance section of the public sector enterprizes/corporate entity buying the goods; and public sector enterprizes and corporate entities should continue to provide price preference to the extent of comparative statements and award works to the local suppliers at best negotiated prices as has been the practice in the past.

The meeting among others, was attended by ministers for commerce, communications, education, agriculture, privatization, labour & manpower, adviser to the president on agriculture, deputy chairman Planning Commission and the chairman BOI.