The Economic Coordination Committee (ECC) of the cabinet that met here on Friday with Dr Hafeez Shaikh in the chair approved the debt swap of Rs160 billion to ease out the circular debt in the energy sector to increase the thermal power generation to the maximum to erase the crippling loadshedding. But the interest, which commercial banks will charge on TFCs (Terms Finance Certificates), would be paid by electricity consumers, a senior official who attended the meeting confided to The News.
If the existing interest rates are applied on arranging the whopping Rs160 billion, then the interest amount will stand at Rs20 billion, which will be paid by consumers as the impact of the interest amount will be included in the tariff and to this effect, Nepra would be issued the policy guidelines. “If kept in view the Rs20 billion as interest payment, then the power tariff will swell by over 2.6 percent,” the official said.
Eminent economist Dr Ashfaque H Khan, when contacted, said that forcing the power consumers to pay interest on Rs160 billion was cruelty. “This is not the way to run the country and economic policies. The government’s economic wizards are simply penalising the innocent masses and encouraging power theft.”
He said raising the power tariff had never been a solution in the past. It is not a solution today and it will never be a solution as we go forward. “The economic managers of the incumbent regime will simply run away from the country, leaving the innocent masses to suffer,” he added.
However, the official who attended the ECC meeting, explained that the government would extend the sovereign guarantee against the Rs160 billion TFCs. The government will pick up the Rs160 billion liabilities against the capacity charges of IPPs and will park them at the power holding company (PHC). The PHC will arrange the said amount through the TFCs from the local commercial banks on the interest rates which areyet to be decided between the Finance Ministry and commercial banks.
The official also said that the NTDC (National Transmission Dispatch Company) owes Rs404 billion but the government was going to arrange only Rs160 billion, ensuring reasonable breathing space to the IPPs that will help increase the thermal power generation.
The ECC also decided that commercial banks will also be requested to continue extending credit lines to the IPPs. To a question, the official said that TFCs would be of five years period and repayment would be paid by electric power distribution companies (Discos). Two years will be grace years to pay the amount with interest. The Discos will open a separate account to collect the revenue to deal with financial payments.
This means that the government would open the ESCROW account for Central Power Purchase Agency (CPPA) — the entity that will handle the financial management in power sector in the future. The CPPA will first be ensuring payments of the fuel cost and clear payments of the IPPs. After that, the CPPA will be paying off the administrative cost and clearing the payments of the electric power distribution companies.
The ECC also accorded approval to the Rs60 billion National Gas Efficiency Project under which the volume of UGF (unaccounted for gas) will be brought down by 4 percent to below 7 percent from the existing 10.8 percent. The Rs60 billion cost of the project also includes Rs14 billion as foreign exchange component.
The both gas utilities — Sui Southern and Sui Northern — have so far paid Rs31 billion as UFG penalty in the last eight years. The gas distribution network stands at 129,044 kilometres in the country and is helping provide gas to 6.22 million consumers.
Under the five-year plan from financial year 2011-12 to 2015-16, the UFG will be bought down by four percent to below seven percent. The World Bank has provided $200 million (Rs19 billion) to Sui Southern under the project for 20 years period, including five-year grace period at mark-up of 5% plus exchange rate risk.
The ECC approved a $200 million loan for Sui Southern. In the meeting it was also revealed that under the project, the Sui Northern would seek a loan of $100 million from the World Bank with 5% interest plus 6.5% exchange coverage fee.
The ECC meeting has allowed the purchase of 100,000 tons of sugar from the domestic producers. On the summary moved by the Ministry of Industry, the ECC asked the Zarai Taraqiati Bank Limited (ZTBL) to resume loaning facility to farmers with immediate effect.
The ECC also constituted a sub-committee comprising the minister for water and power, minister for petroleum and natural resources, Planning Commission deputy chairman and finance secretary to look into gas sale purchase agreement with Turkmenistan along with the gas pricing formula under the Inter-State Gas System Private Limited with Turkmenistan.
The ECC approved in principle Low BTU Gas Pricing Policy for 2012, but made it subject to concurrence of the Law Division. The Law Division will decide whether the ECC or the CCI (Council of Common Interest) will approve the Low BTU gas policy.
A summary moved by the Ministry of Petroleum and Natural Resources maintained that this policy will be instrumental in providing sufficient incentives to investors in the field.
The committee constituted a group comprising PM’s adviser on agriculture and FBR chairman to look into procedure for the gradual increase of levy of 5% to 16% on sales tax on agricultural tractors, in three years.
It may be added that this subject was elaborately discussed in the ECC meeting held on December 2011, which had constituted a committee to review the matter.
While reviewing the sugar situation in the country, the Dr Abdul Hafeez Shaikh directed the TCP chairman to make the payment to all the millers expediently and make sure to avoid any lapse in it.
The TCP chairman informed the ECC that eight millers had been paid, and rest of the millers shall be positively paid by the end of this month.
Earlier, the finance secretary briefed the meeting on the current economic situation of the country, particularly on CPI, SPI, coming cotton and, rice crop, increase in exports, foreign exchange reserves, and borrowing from the State Bank.
The ECC paid rich tributes to Salman Siddique for his outstanding services of as FBR chairman, who shall stand retired this month. Hafeez Shaikh said that Siddique made historic records in the collection of revenue, which will be taken as a precedent for other officers in the Revenue and Finance Division.
No comments:
Post a Comment