Power supply to export-oriented sectors till 30th: Finance Ministry puts MoC on the defensive

ISLAMABAD: Finance Ministry has reportedly put Commerce Ministry on the defensive on its proposal for extension in subsidy on supply of electricity to export-oriented sectors till June 30, 2022, by demanding that in the first instance report on misuse of RLNG by these sectors be shared before seeking favourable comments, well informed sources told Business Recorder.

On May 31, 2022, Commerce Ministry sent an Office Memorandum (OM) responding to Finance Division’s OM of May 27, 2022 on “supplementary grant allocation for continuation of concessionary rates of electricity to export-oriented sectors during 2021-22” and stated that in pursuance of ECC’s decision of August 16, 2011, a meeting was held on September 23, 2021 to deliberate on the issue of misuse of RLNG supply. Further, the ECC meeting of October 11, 2021 directed to constitute another committee to deliberate on energy issue in relation to Textiles and Apparel Policy, 2020-25.

On May 27, 2022, Finance Ministry said that in the first instance, Ministry of Commerce may provide viable recommendations of the Committee, constituted by the ECC on August 16, 2021 to deliberate the issues of misuse of RLNG supply being provided at concessional rates to export-oriented industry.

Finance Ministry, has also shared its OM of September 7, 2021, in which it had suggested to the Commerce Ministry to convene a meeting of the Committee constituted on August 16, 2022 to deliberate the issues of misuse of RLNG at concessional rate to export-oriented industry and submit viable recommendations to the ECC for consideration. Commerce Ministry has not yet convened the meeting of the committee on RLNG misuse.

Subsidy to zero-rated sectors: MoC seeks Rs32bn grant for Power Div

Commerce Ministry, in its response to Finance Ministry has clarified that in light of recommendations of committee tasked to deliberate on energy issue in relation to Textiles and Apparel Policy, 2020-25 meetings were held on October 20 and 28, 2021 and MoC submitted an implementation report to the ECC on December 13, 2021 alongwith revised Policy. Subsequently, ECC on February 9, 2022 considered implementation report and approved revised policy with few amendments as recommended by the Committee.

Commerce Ministry maintained that deliberations are undergoing with Power, Petroleum and Finance Divisions on the matter of concessionary energy tariffs for next FY 2022-23 in accordance with guidelines approved under Textiles and Apparel Policy, 2020-25. However, owing to severe financial constraints, Power Division has conveyed that it will not be in position to sustain subsidy implications and continuation of concessionary tariff for CFY beyond May 31, 2022, if additional supplementary grant is not provided.

Commerce Ministry has maintained that it is essential to allocate supplementary grant to Power Division for continuation of concessional electricity tariff to export-oriented sectors till June 30, 2022 in accordance with the summary approved by the ECC on August 16, 2021 which is as follows: “Finance Division may give financial commitment that additional funds if required by Power Division and Petroleum Division shall be provided to continue concessional energy rates to export-oriented sectors. However, Ministry of Energy may apprise relevant ministries regarding the budgetary situation in time so that Commerce Ministry may place a summary for supplementary grant allocation before ECC of the Cabinet for consideration.”

Commerce Ministry has requested Finance Division to offer its views/comments on the draft summary titled “supplementary grant allocation for continuation of concessionary rates of electricity to export-oriented sector during CFY” before the ECC of the Cabinet for consideration.

Copyright Business Recorder, 2022