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August 30, 2018

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ECC meeting: Increase in gas tariff put on hold

ISLAMABAD: The Economic Coordination Committee (ECC) of the newly-formed federal cabinet met here on Wednesday, but Finance Minister Asad Umar was unable to take decisions on any of the five issues tabled for discussion because the issue of circular debt and its crippling impact on the energy sector consumed most of the time allocated.

Minister for Finance Asad Umar and all the other participants in the ECC meeting were shocked by the Power Division's presentation on the status of Pakistan's circular debt, which has surged to a record Rs1,178 billion. The payables of the power sector stand at Rs596 billion, with an increase of Rs30 billion in July alone. Another Rs582 billion of debt has been parked with the Power Holding Private Company Limited, a purpose-built vehicle.

The Power Division pointed out that the National Electric Power Regulatory Authority (NEPRA) determines the power tariff on the assumption of 100 percent bill recovery, whereas the actual recovery stands at 90 percent, adding Rs120 billion a year to the circular debt. Railways Minister Sheikh Rashid Ahmed noted that the non-participation of NEPRA officials in the ECC meeting stymied any conclusive examination of the issue.

With the matter unresolved, the ECC decided that the finances of the power sector would continue to be managed with the budgeted subsidy until further notice. The 90-minute discussion of the circular debt meant that the ECC deliberations on a mammoth increase in natural gas prices, proposed by the Petroleum Division, could not be completed and had to be deferred until the next meeting of the ECC.

The Petroleum Division had proposed 186 percent increase in prices for domestic It's media trial (Slug)TV talk shows can't discuss sub judice matters

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