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September 4, 2018

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Electricity price increased by Rs2 per unit

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet, headed by Minister for Finance Asad Umar, on Monday announced to conduct a major crackdown on electricity theft after approving an increase in electricity price by Rs2 per unit.

The ECC also agreed to sever all illegal electricity connections within three months. A decision to install prepaid electric meters was also taken. The committee also resolved to take immediate action against power-sector defaulters, including ministries and government departments.

The meeting agreed that electricity meters of those persons, departments and ministries or any private entity will be disconnected if they fail to pay their bills for consecutive three months. On the payment of their bills, they will be provided prepaid meters. The ECC chairman directed the Power Division to take strict legal action against those officials and individuals who are involved in power theft and not to show any leniency on the issue.

On the presentation of the special audit report on payment of circular debt of Rs480 billion paid by the last PML-N-led government, the ECC directed to hold an operational and financial audit of Discos. It was decided that the Auditor General for Pakistan will complete the audit of four highest loss-making Discos in one month's time and the audit of the entire sector will be completed in two months after approval from the cabinet.

The meeting received a presentation on the issue of circular debt that has accumulated over the years to a hefty sum of Rs1,188 billion. The committee was briefed on the impact of Industrial Support Package, Azad Jammu Kashmir subsidised units, Balochistan agricultural tubewells, Fata receivables, and the impact of existing time lag on tariff determination mechanism of the National Electric Power Regulatory Authority (Nepra).

The ECC observed that the PML-N government had taken decision to discontinue the provision of subsidised power supply to AJK in budget 2018 and the previous government had also decided to discontinue the industrial support package. The committee decided to bring the facts to the notice of the cabinet.

The ECC also decided that to cope up with the issue of urea fertiliser shortage in the country. Three urea manufacturing plants that are presently non-operational will be supplied RLNG for a period of four months starting from September with 50 percent cost of RLNG being picked up by the government and the balance 50 percent by the respective manufacturing units. These plants will utilise their full potential and the decision to import fertiliser will be taken after taking into account their production capacity.

The ECC directed the Ministry of Industries and Production to workout figures/data about actual production and consumption of the urea during 2017-18 and the estimates for 2018-19, in consultation with the Ministry of National Food Security and Research and submit a report thereof to the ECC in its next meeting. In case of any shortfall in consumption of urea, the reasons may also be identified in the report,

The ministry was asked to facilitate the operationalisation of three closed fertiliser plants i.e. Fatimafert, Agritech and Pakarab (in case of the latter only to the extent of urea production amounting to 8,000 tons per month) on 100 percent RLNG for urea production for four months (September-December 2018).

It was also directed to workout total subsidy impact on running of all three plants i.e. Fatimafert, Agritech and Pakarab on 100 percent RLNG with 50 percent of subsidy being borne by the government while the remaining 50 percent being picked up by the respective fertiliser plants; and workout the windfall gains reaped by the fertiliser industry, in light of the net variable contribution margins, as a result of charging higher rates as well as exports during 2017-18 and 2018-19.

The windfall gains may be adjusted against the subsidy outstanding in favour of fertiliser industry, under the fertiliser subsidy schemes which were in vogue during the preceding three financial years. The ECC also considered the update on the issue of sale of K-Electric and issued directions to the departments concerned to formulate their recommendations for CCOP.

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