Five export-oriented sectors: PD seeks over Rs84bn to ensure power supply at concessionary rate

ISLAMABAD: The Power Division has reportedly sought over Rs84 billion to ensure supply of electricity to five export-oriented (erstwhile zero rated) sectors at concessionary rate of 9 cents per unit, well-informed sources told Business Recorder.

The Power Division, in its comments on Ministry of Commerce’s summary “regionally competitive energy rates for export-oriented sectors during FY2022-23 (effective from July 1, 2022),” said that it has cleared the subsidy claims of zero-rated industrial consumers till March 2022 amounting to Rs26 billion and the package continued till June 30, 2022 without additional budget available.

On the request of Power Division, Commerce Division initiated a summary for additional supplementary grant during the month of May 2022 however, no decision/allocation/releases were made to the power sector to meet the pending subsidy claims.

According to Power Division, as of June 30, 2022, pending claims of zero-rated consumers of Discos and KE for the FY 2021-22 are Rs26.207 billion, which are required to be cleared from current year allocation of Rs20 billion. The Power Division requires an additional allocation of Rs6.207 billion as supplementary grant for clearing previous year liability.

For current financial year, Power Division requires an amount of Rs77.957 billion as additional budgetary allocation as supplementary grant during CFY2022-23 for provision of concessional tariff to export oriented industries for consumption during the year.

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The Power Division stated that the package will be notified for billing once the subject supplementary of Rs84.164 billion is approved/ released to the Power Division.

In case government approves less allocation, then Power Division will reduce the application of package proportionally for such months/ days as can be met from such allocation, the sources said, adding that on the arguments of Power Division and Finance Division, electricity concessional tariff has been kept limited to only three months.

Petroleum Division argued that SNGPL is providing gas/RING at 50% of the average consumption load, ie, up to 70 mmcfd to captive power units of export oriented sectors, however, as agreed in the meeting chaired by the Prime Minister on July 7, 2022 the gas/RLNG supply to captive power units on SNGPL would be restricted to 50 MMCFD whereas gas/RLNG supply to process units of export oriented sectors would remain upto45 mmcfd.

The Petroleum Division supported the proposals made in the summary subject to following: (i) any increase in gas/RLNG supply to captive units of export-oriented sector on SNGPL would be subject to availability of gas and space in budgeted subsidy of the Petroleum Division; (ii) in order to provide subsidized RLNG to export-oriented consumers on SSGCL estimated subsidy of Rs 11 billion would be required for the CFY; (iii) for SSGCL, subsidy will be distributed on monthly basis based on the actual verified claims/billing to be provided by SSGCL to Petroleum Division as in the case of SNGPL; (iv) Petroleum Division would process the subsidy claims of SSGCL export-oriented consumers from the available budgeted subsidy, however, the shortfall in the budgeted subsidy is to be provided by the Finance Division in the form of supplementary grant; (v) in order to provide regional competitiveness for the export-oriented consumers on SSGC vis-à-vis SNGPL, the indigenous gas tariff for the similar consumers may be fixed at $7/mmbtu; and (vi) Ministry of Commerce through a consultative process would expedite the switch-over of inefficient/single cycle captive power units in export-oriented sectors to power grid where concessionary tariff of 9 cents per kWh is being made available.

Copyright Business Recorder, 2022