ISLAMABAD: Finance Division and Power Division are reportedly avoiding taking the lead in raising a loan of Rs 20-25 billion from banks to be paid to Khyber Pakhtunkhwa (KP) and Punjab as Net Hydel Profit (NHP), according to well-informed sources in Ministry of Water Resources.
On May 26, 2021, Power Division presented a proposal to the Economic Coordination Committee (ECC) of the Cabinet seeking a supplementary grant of the balance amount of Rs 86.84 billion in favour of Power Division/CCPA-G for payment to Wapda on account of NHP payment to Punjab and KP.
According to the proposal, funds would be adjusted against current year’s unbudgeted subsidies of Power Division. However, Finance Division did not support the proposal.
During the ensuing discussion it was observed by the ECC that proceeds of the NHP were to be provided to the provinces as a constitutional obligation; and that though settlement of arrears is an important issue yet there is a need to develop a comprehensive mechanism so that a similar situation may not emerge in future. Wapda must ensure non accumulation of the arrears in this regard in future.
After a detailed discussion, the ECC constituted a committee under the chairmanship Minister for Finance & Revenue and comprising of Secretary Power Division, Secretary Water Resources Division, Secretary Finance Division and Chairman Wapda, to deliberate on the mechanism of settlement of arrears of the NHP and make recommendation for consideration of the ECC. Secretariat support to the Committee was provided by the Power Division.
An interesting situation on this issue emerged during the first week of June 2021 when Finance Ministry communicated to the Ministry of Energy that Minister for Finance, Shaukat Tarin presided over a meeting on June 2, 2021, attended by Deputy Chairman Planning Commission, SAPM on Finance and Revenue, Chief Secretary KP and Secretaries, Finance and Power Division, wherein the Finance Minister approved the following course of action "to mitigate the liquidity issue of CPPA-G, Power Division will move a summary for ECC seeking approval for bank financing of around Rs 20-25 billion with GoP guarantee".
Ministry of Energy was also conveyed that Finance Division will support the summary as already agreed during the meeting chaired by the Speaker National Assembly in the meeting held in his chamber in April 2021.
Power Division, sources said, argued that neither Secretary Power attended that meeting nor was he invited to the 2 June 2021 meeting held under the chairmanship of the Finance Minister.
The meeting of Finance Minister-led committee which was to suggest a mechanism for payment of NHP in a timely manner without burdening the national exchequer has not yet been convened.
According to sources, the loans for the payment of the NHP will have to be arranged by Wapda being its constitutional liability towards the provinces.
Power Division, sources said, will initiate a summary for consideration of the ECC to allow Wapda to raise bank financing of around Rs. 20-25 billion with GoP guarantee as Nepra in its recent determination has already a allowed mark-up of Rs. 11 billion to Wapda on a previous payment to the provinces.
The Federal Cabinet, in its meeting held on June 2021 under the chairmanship of Prime Minister Imran Khan, ratified the decision of the ECC regarding NHP.
Minister for Information and Broadcasting, Chaudhry Fawad Hussain’s statement to the media in his post-cabinet meeting briefing that the Cabinet has approved Rs 90 billion to clear NHP, was perhaps incorrect. In fact, the cabinet ratified the decision of the ECC held on May 26, 2021 to suggest a mechanism for payment of NHP in a timely manner without burdening the national exchequer, said an official on condition of anonymity.
Copyright Business Recorder, 2021