ISLAMABAD, May 20: The federal government on Thursday took over Rs61.8 billion loans of Wapda as equity to improve its financial viability for subsequent privatization.
A decision to this effect was taken by Economic Coordination Committee (ECC) of the cabinet that met here on Thursday and was presided over by Finance Minister Shaukat Aziz.
This is for the third consecutive year that federal government has injected its equity into Wapda at the rate of over Rs60 billion per year. The utility, however, continues to post more than 25 per cent system losses that it directly recovers from the consumers.
The government on Thursday claimed that this debt-equity swap amounting to Rs61.8 billion would spare Wapda funds to improve its delivery of services. The government would increase its equity in Wapda accordingly and help improve Wapda's financial viability.
The meeting reviewed stocks of sugar, fertilizer, oil and ghee and expressed satisfaction over their availability. To improve electric generation capacity of Wapda at cost effective rates, the ECC approved supply of gas for Sukkur and Quetta Power Plants.
To encourage cost effective production of electricity, the ECC approved allocation of six mmcft pipeline quality gas on nine months basis (March to November) to Altern Energy Limited up to 2012-13 from SNGPL system. The cost of pipeline extension and other infrastructure required for supply of gas to the power plant will be borne by the company.
The meeting noted that exports during ten months were around $10 billion, registering a growth of over 13.1 per cent. On average, the monthly exports stood at $1 billion. Keeping in view the trends, it is expected that Pakistan would exceed the export target by the end of financial year.
Similarly, imports registered a growth of 19 per cent and are expected to cross $12.8 billion. So far imports during the ten months stood at $12 billion. The non-oil-non-food imports during the ten months registered a growth of 30 per cent reflecting a surge in the domestic economic activity.
The revenue collections during the ten months stood at Rs397.2 billion as against Rs388.8 billion in corresponding period of the last year registering an increase of 8.4 per cent. The sales tax collections registered a growth of 12.3 per cent while customs posted a healthy growth of 32.5 per cent.
The Governor State Bank informed the ECC that remittances by overseas Pakistanis are expected to exceed the target and would be in the vicinity of $3.8 billion. The target for the current year was $3.6 billion. The remittances so far received during the current financial year stood at $3.2 billion.
The ECC reviewed prices of essential items and noted that the rate of inflation based on CPI during July-April, 2003-04 over July-April, 2002-03 stood at 3.93 per cent and during July- April 2002-3 over July-April, 2001-2, it was 3.27 per cent indicating a higher inflation.
The meeting also approved procurement of 300,000 metric tons of export quality sugar in export packing by TCP on the condition that Pakistan Sugar Mills Association would ensure payment to growers before June 15 and start next crushing season on November 1, 2004.
The committee, however, could not devise a mechanism as to how arrears to the growers would be ensured as most of the sugarcane arrears were against millers in Sindh while major chunk of export quality sugar would be purchased in Punjab.
The committee was informed that millers were already denying real sugar price to the growers at the time of cane purchase through less measurement and a participant demanded that it should be monitored by the government.
The ECC noted with satisfaction growth in construction industry, specially housing, which has triggered increased demand for the steel. It approved a formula to provide compensation for price variation in steel for federal government projects to the construction industry.
The formula, inter alia, would be based on rate of Pakistan Steel wherever applicable. It would serve as a guideline for the Federal Government, statuary bodies, provincial and local governments. The escalation in prices would be applicable on steel bars, pipes, sections, strips and sheets only.
The ECC also allowed special dispensation in Afghan Transit Trade Agreement 1965 to enable private tankers to transport edible oil by road to Afghanistan. It, however, reiterated first right to Pakistan Railways and NLC in transporting the commodity as and when they are in a position to do so.