The Economic Co-ordination Committee (ECC) of the Cabinet has approved settlement of Rs 70 billion reconciled subsidy claims of power sector. Sources said that the ECC meeting chaired by Finance Minister Ishaq Dar on Monday was requested by Ministry of Water and Power to approve the settlement of the subsidy as it has been raising the issue of unpaid claims pertaining to power sector subsidy.
The ECC was informed that the matter of Rs 70.167 billion of reconciled unpaid subsidy claims as on 30.06.2015 was also discussed and it was decided that the Water and Power and Finance Ministry will finalise details of non-cash settlement of spill over subsidy claims of Rs 70 billion in the first instance.
The two ministries reconciled the spill over claims as on 30.06.2015 (other than claims of AJ&K subsidy) and have agreed on non-cash settlement plan. Sources said that as per settlement plan, non-cash settlement of Rs 7.96 billion was to be made against the government equity of Rs 342 billion in the distribution companies for fiscal year (2012-13) as well as non-cash settlement of Rs 16.76 billion against the government equity of Rs 342 billion for PESCO for fiscal year 2012-15.
The settlement also includes Rs 16.021 billion non cash settlement against relent loans and cash development loans of PESCO for fiscal year 2013-14, K-Electric non-cash settlement against relent loans and CDL of Rs 15.021 billion and FATA's non-cash settlement of Rs 14.868 billion for (2013-14) against relent loans and CDL. The ECC was informed that Finance Division would execute non cash settlement of Rs 23.962 billion against equity injection out of Rs 342 billion CD settlement of 2013, in distribution companies.
Subsequently concerned entities will make relevant adjustments in their books of accounts against their receivable/payables towards the government. Finance Division will evolve the mechanism for these adjustments. The ministry also stated that Rs 46.205 billion will be settled against the cash development loans and foreign relent loans obtained by the power sector entities.
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