ISLAMABAD: The Federal Cabinet has given final approval to the recommendations of the Cabinet Committee on Energy (CCoE) for payment of Rs403 billion to Independent Power Producers (IPPs), with the government maintaining that the agreement would yield over Rs800 billion saving in the next 20 years and reduce the cost of electricity.
This was stated by Minister for Information and Broadcasting Shibli Faraz and Minister for Planning, Development and Reforms Asad Umar, while speaking at a news conference after cabinet meeting presided over by Prime Minister Imran Khan on Tuesday.
Shibli Faraz said out of Rs403 billion, Rs122 billion was interest payment, Rs72 billion payment of the PSO or other suppliers companies.
“The breakdown of the remaining Rs1,300 billion is Rs700 billion of the IPPs and Rs600 billion of GENCOs,” added the minister.
The information minister said that agreements signed with the IPPs in the past were “against the people and the country” and the government was unable to get out of expensive contracts because of international obligations.
“Therefore, the government decided to engage with IPPs to reach an understanding over a mechanism to get some concession [from IPPs] in capacity payments,” said the minister adding that after prolong engagement and complex negotiations – without compromising either on forensic audit or anything else – reached an agreement on a limit (break) on dollar-rupee parity.”
He said capacity payment has increased from Rs650 billion last year to Rs850 billion this year because of addition of additional power in the system and more power would also be added to the system.
The government was worried about excessive and expensive electricity, he further stated.
The minister maintained that there would be saving of Rs836 billion over the next 20 years and tariffs of electricity would also be reduced after the agreement.
The government owed this money to the IPPs he said and added that the power sector circular debt has risen to over Rs2 trillion.
The Prime Minister’s Office said the federal cabinet was informed that agreement with the IPPs would save Rs800 billion over the next 20 years and payment to the IPPs would be made after pre-audit.
The meeting was further informed that a high-level committee has been constituted comprising two judges of the Supreme Court and an auditor to look into the matter of over Rs57 billion that was highlighted in Muhammad Ali report.
The meeting was also informed that 12 IPPs have won the case of Rs92 billion and the government after negotiation saved Rs32 billion.
Shibli Faraz added that he would arrange a briefing of media with the people from the energy sector who were involved in this process of negotiations, so that they could respond to their questions in this regard.
The minister said that Pakistan power producers’ rate of return has been converted in to rupee and foreign power producers’ rate of return on equity has been reduced from 17 percent to 15 percent.
The federal cabinet allowed import of three lac tons wheat and five lac tons of sugar exemption of the PPRA rules.
The minister added that the federal cabinet has also decided to assign the responsibility to monitor the prices of essential commodities in the market to the district administration (deputy commissioners and commissioners), and expecting the decision to yield positive results as price monitoring committees remained ineffective to monitor the prices of essential commodities.
Historically, he said district administration has been monitoring prices in the market.
The prime minister has also directed the tax authorities to tap alternate resources for revenue mobilisation such as taking action against smuggling of items as was in the case of petrol, cigarettes, etc, instead of burdening the people through indirect taxes.
The cabinet meeting deliberated on the menace of smuggling, and noted that it was hurting the industry as well as economy and causing a loss to the revenue, he said.
The minister added that when there is a shortfall in revenue; the government imposes indirect taxes, which adversely impacts everyone.
He said that recently the Customs Department and the Federal Board of Revenue have effectively taken action against 2,192 petrol pumps involved in the sale of smuggled petrol which was causing Rs120 billion loss in terms of taxes.
The cabinet meeting also expressed concern over release of 32,000 metric tons six-year old wheat to the people of Karachi by the Sindh government, he said, adding that this release of old stock by the provincial government has endorsed the federal government’s view point that the Sindh government was not releasing stock thereby creating wheat crisis in the country and forcing people to buy expensive wheat flour.
The minister said people of Karachi must raise their voice against it and this issue must also be raised in the Sindh Assembly.
On implementation of the sugar report’s proposed actions, he said that the delay in implementation was primarily due to vacating stay orders from courts.
The minister said that now the government is installing cameras in all sugar mills to know their actual stock position; (ii) the Federal Board of Revenue (FBR) tax audit has improved Rs368 billion tax liabilities; (iii) the GST on sugar has increased by 60 to 65 percent increase - Rs29 billion; (iv) farmers were paid a good price of their cane crop; (v) the FIA detected Rs22 billion money laundering; (vi) inquiry is also being conducted on subsidy by the NAB.
The prime minister gave one week for appointment of the CEOs/heads of public sector organisations after he was informed that there are 86 government entities without heads of the department.
The prime minister directed them to inform him about the reasons for not appointing their heads.
The prime minister said that there should be no unannounced load shedding in any part of the country.
The federal cabinet gave approval to the establishment of 30 accountability courts in various cities including Karachi, Lahore, Multan, Peshawar, Hyderabad, Rawalpindi, Sukkur, and Quetta.
The federal government gave approval to the appointment of Masroor Khan as chairman Oil and Gas Regulatory Authority (Ogra).
The meeting gave extension in the Afghanistan-Pakistan Transit Trade Agreement (APTTA) for the next three months
The cabinet appreciated the State Bank of Pakistan’s initiative of Roshan Digital Pakistan as so far, overseas Pakistanis have remitted $500 million, and it gave approval to the tax amendment ordinance 2021 to facilitate investment in the Roshan Digital Pakistan project, the minister said.
The meeting was also given a briefing by the IT task force for the promotion of IT in the country.
Federal Minister for Planning Asad Umar said the government wants to end the corrupt practice of horse trading from the Senate elections, and that is why it approached the apex court for seeking its guidance and issued an ordinance for holding election of senators through show of hands.
The minister regretted that the opposition has opposed the bill and was now making a hue and cry.
About a video clip circulating on media, he said it is imperative to acknowledge the importance of the Senate election reforms again.
He said: “democracy works when people sitting in the assemblies are trusted by the people who voted them in.” The Pakistan Muslim League-Nawaz (PML-N), he said, started the process from “Changa Manga” and it is persisting with that approach to politics even today.
He said the Senate amendment being introduced today only goes against those who use their power and money to influence election process.
He said, “we approached the SC regarding the Senate polls, but thought of introducing the presidential ordinance since Supreme Court is yet to rule on the matter and the Senate election date is nearing.”
He further reiterated the PTI's stance that the party will accept apex court’s ruling on the matter.
APP adds: Talking about the Sugar Commission report, minister said the government won the cases filed by the sugar mafia in different provinces.
As per the report, under an action matrix the Federal Board of Revenue (FBR) had pointed out tax liabilities of Rs 368 billion, general sales tax on sugar increased by 60 to 65 percent or Rs 29 billion, and the farmers received good timely payments.
He said the Federal Investigation Agency (FIA) had unearthed Rs 22 billion of money laundering.
Implementation of the sugar report was delayed due to court cases, he said, adding now cameras were being installed in the sugar mills to ascertain the actual position of stocks.
He said in the past sugar prices were manipulated by the mafias. The government was working against the mafias but action against them also got delayed as those people got together for their vested interests.
Copyright Business Recorder, 2021
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