ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Tuesday granted approval for a gradual sovereign guarantee for the Chashma Nuclear Power Plant (C-5) for a Chinese loan of RMB25,080 million (Rs1 trillion) at an interest rate of three percent.
The Ministry of Finance, in its statement, claimed that a summary was submitted by the Pakistan Atomic Energy Commission on the issuance of Government of Pakistan (GoP) Guarantee for the Chashma Nuclear Power Project Unit-5 (C-5). The ECC decided to allow the issuance of a gradual sovereign guarantee for the Chasma C-5 project within the International Monetary Fund (IMF) programme.
According to official sources, after final negotiations, China National Nuclear Corporation Overseas Limited (CNOS) offered a 1,200 MW plant at a price of RMB25,080 million at an interest rate of three percent, no Sinosure, capitalisation of IDC for eight years, no management fee and commitment fee for the whole loan tenure. Eighty-five percent of the contract price, amounting to RMB21,318 million, will be financed by the supplier as a loan.
Keeping in view the IMF programme, it is proposed that the GOP may issue a gradual sovereign guarantee at the time of each loan tranche of C-5 instead of an up-front sovereign guarantee. The ECC also considered and approved a summary of the Ministry of Aviation on state support agreement for the outsourcing of the Islamabad International Airport through international competitive bidding.
The International Finance Corporation (IFC) transaction adviser also highlighted that an improvement in service quality at the airports largely depended on the performance of government agencies working at the airports. In this regard, the IFC emphasised the need for a service-level agreement between all these entities performing “reserve functions” and the Pakistan Civil Aviation Authority (PCAA), so that the authority may not be held responsible for any breach of agreed performance indicators.
The PCAA would oversee the performance of these reserve functions and report any breach, if happens. Any financial liability accruing from a breach of any performance indicator by an entity performing a reserve function would be undertaken by the GOP under a State Support Agreement.
Moreover, the IFC also recommended that the GOP would backstop the PCAA payment obligations in the case of termination payments under all scenarios through the State Support Agreement.
Lastly, the concessionaire will be allowed to set off any non-payment by the PIA against the PCAA revenue share under the Concession Agreement. However, under the State Support Agreement, the GOP would compensate the PCAA for revenue loss on account of PIA under a separate agreement. The steering committee agreed to all the proposals.
Accordingly, the IFC has prepared the State Support Agreement in line with the recommendations. The draft was also shared with all stakeholders, including the Ministry of Foreign Affairs, Ministry of Narcotics Control, Airports Security Force, Pakistan Meteorological Department, Department of Plant Protection, Federal Board of Revenue, Ministry of National Health Services and Regulations, Ministry of Overseas Pakistanis and Human Resource and Federal Investigation Agency through Ministry of Interior.
According to an official announcement made after the ECC meeting, Federal Minister for Finance and Revenue Senator Ishaq Dar chaired the meeting. The summary of the Finance Division on the SME Asaan Finance (SAAF) Scheme was submitted for consideration by the ECC. The ECC approved the proposed revised features of the scheme and its budgetary impact as proposed by the State Bank of Pakistan (SBP).
The ECC considered a summary of the Ministry of Industries and Production regarding Urea fertilizer requirement for the Rabi season 2023-24. Considering the recommendations/ proposals given by Fertilizer Review Committee (FRC), the ECC decided that the SNGPL-based plants i.e. Fatima Fertilizer (Sheikhupura) and Agritech may be allowed to operate beyond 31st August 2023 till 15th of October, 2023.
The Ministry of National Food Security & Research submitted a summary for an extension of the financial schemes of Kissan Package 2022. The ECC after discussion allowed an extension in the time period as per fiscal space available till 31 December 2023 to Financing Schemes of the Kissan Package including the following: i. Provision of subsidy for interest-free loans for subsistence farmers in flood-affected areas. ii. PM’s Youth Business and Agriculture Loan Scheme (PMYBALS) iii. Markup Subsidy & Risk Sharing Scheme for Farm Mechanisation (MSRSSFM) iv. Interest-Free Loan to landless farmers in flood-affected areas.
The ECC also considered a summary of the Ministry of Industries & Production regarding the North Waziristan District Single Entity Export Processing Zone. It was decided that Mineral Lease was located in Muhammad Khel for an area of 30 Sq.Km (ML–30) and Exploration Lease located in Manzar Khel for an area of 101 Sq. Km (EL-101) be declared as NWD Single Entity Export Processing Zone under Section 2(k) of the EPZA Ordinance 1980.