Ministries, Divisions told: Proposals must contain expenditures break-up: ECC

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has directed all ministries/Divisions that in future the break-up of expenditures must be provided in the proposals submitted through summaries to take an informed decision, well-informed sources told Business Recorder.

These directions were issued at a recent meeting of the ECC while discussing a summary of Power Division regarding PM’s Fan Replacement Program. The ECC also expressed annoyance at the National Energy Efficiency and Conservation Authority (NEECA) for not kicking-off the project despite lapse of one year.

The NEECA, established under the National Energy Efficiency and Conservation Act, 2016, is responsible for formulating and implementing policies to promote energy conservation across various sectors in Pakistan. It serves as a federal focal agency for driving national efforts toward efficient energy use.

Fans replacement in Discos, KE: NEECA seeks PD’s help on mode of financing

The NEECA plays a key role in identifying priority areas for energy savings and developing practical solutions to reduce overall consumption.

Under the directives of the Prime Minister of Pakistan, NEECA had developed a Nationwide Fan Replacement Program that aims to replace 88 million inefficient fans in the country.

The program is expected to reduce peak electricity demand by 5,000 megawatts. To facilitate consumer convenience, the NEECA has designed the program as a digital credit product utilizing on bill financing mechanism, with the support of the Ministry of Energy (Power Division), State Bank of Pakistan(SBP), and Commercial Banks. The program will utilize an end-to-end digital platform where the entire process is automated via an online portal where the consumers, fan manufacturers, DISCOs, and banks will be in-sync on a single platform.

The Power Division further noted that the budgeted allocation of Rs.2 billion for FY 2024-25 was made for the PM Fan Replacement Program. Rs.1.5 billion was earmarked for the 10% Risk Coverage Government guarantee mechanism by SBP, Rs.500 million was for the program implementation and awareness activities/campaign by NEECA.

Power Division took up the case for release of funds with Finance Division which agreed to release funds amounting to Rs.242 million for the 1st & 2nd Quarter of current fiscal year 2024-25 vide their letter of January 31, 2025 to the Power Division. However, budgeted allocated funds for the Fan Replacement Program were placed under the Finance Division Demand No. 45 instead of Power Division’s Demand No.33

Approval of the ECC was solicited for a Technical Supplementary Grant amounting to Rs.106 million from Rs.242 million under Demand No.45 of Finance Division to Demand 33 of Power Division keeping in view the time shortage during the Current Financial Year.

During the ensuing discussion, the forum expressed concern that project could not kick-off despite the lapse of one year. It was explained that execution of the project had been delayed primarily due to non-finalization of modalities between the SBP and the Commercial Banks.

It was further noted that the banks needed system upgrades to integrate the project requirements in their I.T infrastructure. The forum noted that the breakdown of the expenditure had not been provided in the summary.

The Power Division explained that the requested funds would be utilized for meeting costs associated with the procurement of IT infrastructure, awareness campaigns, system integration and HR costs. The forum was also informed that the local fan manufacturers shall also be encouraged to bear the cost of awareness campaign.

After discussion, the ECC approved the proposal Technical Supplementary Grant amounting to Rs.106 million from Rs.242 million under Demand No.45 of Finance Division to Demand 33 of Power Division keeping in view the time shortage during the Current Financial Year. The ECC also directed the Finance Division to facilitate the Power Division in finalising the modalities of the project by way of coordination with the SBP and Commercial Banks

The ECC further directed that in future the break-up of expenditure must invariably be provided in the proposals submitted through summaries by sponsoring Divisions to enable the ECC to take an informed decision.

Copyright Business Recorder, 2025