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October 1, 2020

ECC approves increase in gas, electricity tariffs; RLNG for private sector

October 1, 2020

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Wednesday approved increase in electricity and gas tariffs and supply of re-gasified liquefied natural gas (RLNG) to five export-oriented sectors.

The ECC exempted domestic consumers and tandoors from gas tariff increase and announced subsidy on electricity. It was decided that the increase should not be more than one-third of the gas infrastructure development cess, which was imposed till August.

ECC also approved increase of Rs20 per month as meter rent for domestic consumers for both gas companies.

The ECC reduced the margin of commission of Trade Corporation of Pakistan on import of wheat and sugar to 0.75 percent from the existing 2 percent.

“As the matter of availability of wheat is crucial so there should be an update on the issue as the starter in each meeting of the ECC,” Hafeez Shaikh, adviser to Prime Minister on finance and revenue said.

ECC decided to rationalise the tariff of the power sector and quarterly adjustments which were due for the period from November 2019 to June 2020.

There would have been a price increase in tariff to the tune of Rs1.62/ kilowatt-hour but the ECC also decided to add subsidy to the price for the end consumers that comes to about Rs1.30/kWh, so the net increase that will be passed on to the consumers of electricity up to 200 units will be Re0.32.

The meeting was told that gas supplies would be reduced to 50 percent for both Saturdays and Sunday to the export sector for two consecutive weekends and possibly the third weekend starting from this month.

Once this is done there will be no curtailment on Sundays. The weighted average tariff will be charged at Rs930/ million metric British thermal unit till February next year.

From March 2021 onwards notified domestic tariff would be charged unless an alternate mechanism is devised and approved by that time.

The gas tariff hike will generate Rs22 billion for the government.

ECC allowed gas / RLNG supply to exporters of five zero-rated sectors.

“In order to avoid curtailment of gas to these industries, which are heavily reliant on gas, supply of LNG will be made available to the industrial sector to ease up pressure on the SSGC system,” the finance ministry said.

ECC was requested to start the implementation of retrenchment plan for Pakistan Steel Mills (PSM) on immediate basis by allocating Rs19.7 billion to initiate the process.

The Supreme Court directed that an amount of Rs.11.7 billion may be deposited with the Supreme Court to pay off the liabilities of the non-litigants who have retired from PSM till 18 May 2020.

ECC in an earlier meeting asked the ministry of industries and production to submit the list of non- litigants and their dues.

It was briefed to the ECC that there are 3,978 retired employees who are non-litigant. ECC allowed (in principle) the conversion of National Highway Authority loans into government grants on the presentation of an operational and corporatization plan for NHA (National Highway Authority). The minister for planning will oversee the preparation of this plan.

The request of NHA was approved on the ground that the projects selected by National Highway Authority for execution are not purely on financial viability, and those projects which are executed in remote areas have very less revenue generation potential but these are executed as social development projects.

For the management and maintenance of Gurdwara Darbar Sahib, Kartarpur, ECC allowed establishing a project management unit (PMU), with the creation of 126 posts and recurring budget and other costs to make PMU a self-financing body under the administrative control of the Evacuee Trust Property Board.