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May 31, 2020

ECC sets yardsticks for Rs200bln payout to power firms

Business

May 31, 2020

ISLAMABAD: The economic coordination committee (ECC) of the cabinet on Saturday linked disbursement of Rs200 billion, raised in Sukuk issuance, with maximum power generation in the next three months.

The power generation firms are now liable for continuous electricity supply in the next three months and also pay their debt liabilities as well as fulfill their due tax requirements for the eligibility of payout from Rs200 billion fund.

Adviser to Prime Minister on finance and revenue Abdul Hafeez Shaikh chaired the meeting of the ECC.

The government recently raised Rs200 billion, primarily to pay overdue liabilities of power sector. However, it now placed a criteria in principle for disbursement of funds to ensure availability of electricity supply in summer season when demand increases manifold.

A statement said the ECC “discussed in detail and approved the Criteria for Disbursement of Rs200 billion in power sector received through Islamic Sukuk”. “According to the decision made by the forum energy purchase price inclusive of GST will be paid to ensure maximum generation is available during next three summer months (June, July and August 2020) according to the generation plan of next three months.”

The statement said the capacity payments will be disbursed to meet the debt servicing and taxation requirements for the period from June to end August 2020 and payments to WAPDA, nuclear power plants and partial settlement of import of power from Iran and NTDC transmission charges will be disbursed separately for operational requirements for public sector plants and entities, as WAPDA and Nuclear power plants comprise of more than 30 percent of the total planned generation in the next three months. “However, this disbursement criterion will be followed for funds released under Rs200 billion only.”

The ECC directed ministry of energy to submit a proposal in next two weeks setting up the general principles and exact formula of payments based on the principles for the future payments. The ECC also directed the energy ministry to minimise discretion in the principles/formula so “that the funds may reach the maximum possible number of receivers and reduce the built up of liabilities towards the government.”

“It was also directed that as soon as the payments are made the information should also be made public through the official website of the ministry for the information of the general public,” the statement said. The ECC also approved the release of Rs525.86 million in favor of government of Azad Jummu Kashmir for disbursement amongst the eligible commercial and industrial consumers of electricity under the PM’s SME relief package scheme and similarly Rs136.3 million to be provided to the government of Gilgit Baltistan for disbursement amongst the eligible commercial and industrial consumers of electricity.