ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved Rs50 billion in the ongoing fiscal year as an advance against future subsidy claims for the power sector.
A meeting of the ECC presided over by Finance Minister Miftah Ismail on Monday also approved Rs36 billion for the Petroleum Division to maintain the sustainability of the LNG supply chain as well as import of the petroleum products.
The meeting was informed that the allocated amount shall be released to the SNGL against its pending claims in respect of the cost of the RLNG diversion to the domestic sector for setting off the payable of the PSO and the PPL against the RLNG supply.
On Rs50 billion, sources contended that a meeting was held on 3rd June 2022 in the Finance Division, which was chaired by Minister for Finance and Revenue and attended by among others Minister for Power, Ministers of State for Finance and Revenue and Petroleum, Secretary Finance Division, and Secretary Power Division.
During the meeting, the Power Division presented the position of estimated releases from the budgetary allocation vis-a-vis informed the meeting Power Division presented the position of estimated releases from the budgetary allocation vis-à-vis the cash requirements for fuel availability/IPP operations.
Oil and gas consumption in power
In accordance with the decisions of the meeting, the CPPA-G has also approached this Division that due to rising fuel prices and payments required to be made to the IPA, the sector is still facing a shortfall of about Rs200 billion. The CPPA-G has requested that a supplementary grant of Rs50 billion is required immediately to ensure the availability of requisite fuel to cope with the increasing demand of electricity during the summer months.
It is reiterated that the power sector is currently facing a liquidity crisis which has worsened due to the rise in energy prices in the international market. In this scenario, the credit lines of IPPs have exhausted to procure fuel and IPPs are pressing hard for clearance of the outstanding receivables. Therefore, immediate cash release is required to manage the liquidity crunch.
The Ministry of Industries and Production submitted a summary for extension of the Prime Minister’s Relief Package-2020 and fixation of ghee prices at the Utility Stores Corporation. The ECC approved an extension in the Prime Minister’s Relief Package-2020 up to 30th June 2022 on all five essential items and allowed that ghee shall be sold on all the USC outlets throughout the country @ Rs300/kg from 9th June 2022 irrespective of the higher market prices.
The ECC further approved an allocation of funds Rs3,447.60 million in favour of the USC through a supplementary grant.
On a summary of the Ministry of Aviation for payment of sales tax for leased aircrafts on instalments basis, the ECC after considering incoming Hajj 2022 and financial constraints of the PIACL approved payment of GST @ 17 per cent i .e. Rs1.596 billion approximately on the total rental value of Rs9.388 billion of four A320 leased aircrafts on monthly instalments over the lease term starting from the date of arrival of aircrafts, including one already arrived.
The meeting was informed that the Pakistan International Airline Corporation Limited (PIACL) is going to induct four A320 aircrafts on dry lease basis for the period of 72 months.
Due to financial constraints, the PIACL is not in a position to pay GST on the total rental value in lump sum.
The ECC accorded approval of Rs4,000 million additional funds for the project “construction of Gilgit-Shandoor Road, N-140” after the Ministry of Communications presented a summary on the requirement of additional funds for the construction of Gilgit-Shandoor road, N-140.
Rs2,000 million were allocated in the federal budget 2021-22, whereas, actual requirement of funds to acquire land and make payments of certified liabilities is Rs6,000 million.
The Petroleum Division submitted a summary for enhancement of the oil and gas production from the TAL blocks vis-a-vis provisional allocation of gas price.
Keeping in view the shortage of gas in the country, the ECC conditionally allowed M/s MOL to commence production from Tal Block namely, Mamikhel South.
TAL JV was given the 2012 Policy Price on a provisional basis till a further decision of the government. Ministry of Energy, Power Division submitted a summary on tariff rationalization for the power sector. The ECC after a detailed discussion approved the annual rebasing plan with certain modifications.
The ECC also directed Power Division to recommend subsidy reform adjustment for unprotected consumers which was approved in December 2021 but not implemented.
The ECC also considered and approved a revised ex-officio Steering Committee of the Targeted Commodity Subsidy Program (TCSP) to oversee the implementation of a Commodity Subsidy Program with the Minister of Poverty Alleviation and Social Safety as chairperson.
The ECC approved supplementary/technical supplementary grants; (i)Rs25.61 billion for the Petroleum Division for the disbursement of Price Differential Claims (PDCs) to OMCs/refineries for the first fortnight of June 2022 and additional requirements of the previous fortnight; (ii) Rs36 billion in favour of the Petroleum Division to maintain the sustainability of the LNG supply chain as well as import of petroleum products.
Copyright Business Recorder, 2022
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