Reconciled power sector payables: Sindh urges MoF to rescind ‘at source deduction’ order

ISLAMABAD: Finance Department (Sindh) has requested Federal Finance Ministry to rescind its order regarding at source deduction of 25 per cent of reconciled outstanding power sector payables of provinces as the provincial government is unable to pay entire amount of defective connections due to limited financial resources, well informed sources told Business Recorder.

Special Secretary (Resources), Finance Department Sindh, Tariq Ali Shah, in a letter to Secretary Finance Imdad Ullah Bosal referred to Finance Department’s letter of January 24, 2024 and Energy Department Sindh letter of January 26, 2024 on the issue of 25 per cent claims.

According to Tariq Ali Shah, Energy Department in its letter noted that reconciliation exercise with M/s SEPCO on outstanding claims under two major categories, i.e., Communicated (defective) connections (July 2019 to March 2023) and streetlights connections (July 2023 to November 2023) was amicably completed.

And both parties agreed that an amount of Rs5.39 billion is liable to be paid to M/s SEPCO against cumulative claim of Rs 9.66 billion.

Energy sector: Major step taken towards reducing circular debt

Finance Department Sindh further agreed that M/s SEPCO would exclude/ delete the differential amount of Rs 4.27 billion from the arrear claims against the electricity connections of government of Sindh in respective categories.

Special Secretary maintained that on the request of the Energy Department through letter of January 26, 2024 for release of Rs 5.39 billion in favour of M/s SEPCO, Finance Department Sindh, owing to limited fiscal space, agreed to release the amount in three equal monthly instalments during FY 2023-24.

The first monthly instalment amounting to Rs 1.8 billion would be released to M/s SEPCO against mentioned periods/ category on January 29, 2024 which probably has been released.

However, in the light of existing position, Finance Department Sindh requested Finance Ministry (GoP) that the impugned order of the Federal Adjuster be rescinded and no at source deduction of the disputed amount, i.e., Rs 5.39 billion be made from the regular monthly share of the government of Sindh.

Finance Department has assured that duly reconciled amount would be released to M/s SEPCO in three equal monthly instalments during FY 2023-24.

Earlier, Energy Department (Sindh), in letter of January 26, 2024 informed Secretary Finance Department, Sindh that SEPCO has furnished the billing statement on AMR communicated (defective) connections for the period from July, 2019 to November, 2023 and street light connections for the period from July, 2023 to November, 2023 amounting to Rs. 9.66 billion.

Energy Department further noted that a meeting under the chairmanship of Additional Secretary (Power), Energy Department was held on January 22, 2024 wherein the reconciliation of communicated (defective) electricity connections for the period from July, 2019 to November, 2023 and Street light connections for the period from July, 2023 to November, 2023 was carried out cumulatively, and it has been decided that an amount of Rs. 5.39 billion is liable to be paid to SEPCO against cumulative claim of Rs. 9.66 billion.

The rest of the amount of Rs. 4.27 billion is to be waived off and will be deleted from arrears of the government of Sindh connections. This reconciliation process was carried out jointly with the representative of Sepco.

Energy Department requested Finance Department to release funds amounting to Rs 5.39 billion in favour of Sepco against communicated (defective) electricity connections for the period from July, 2019 to November, 2023 and streetlights connections for the period from July, 2023 to November, 2023.

Copyright Business Recorder, 2024