Raising Pepco's Rs 104 billion dues issue at NFC meeting: Power ministry expresses reservations on MoF refusal

The Ministry of Water and Power is reported to have serious reservations against Finance Ministry's refusal, during the National Finance Commission (NFC) meetings, to allow it to raise Pepco's outstanding dues of Rs 104 billion against provincial governments, the Federally Administered Tribal Areas (FATA), and AJK, sources close to Minister for Water and Power Pervez Ashraf told Business Recorder here on Monday.
"We had requested the Finance Ministry, on September 5, 2009, to take up the issue, at NFC level, regarding Pepco's outstanding dues against provincial governments, FATA and AJK, but Finance Ministry advised us not to raise the matter at Inter Provincial Co-ordination Committee (IPCC) forum," sources said.
Giving the background, they said that the Economic Co-ordination Committee (ECC) of the Cabinet had considered the summary on "power sector's financial issues and proposed solutions" submitted by the Ministry of Water and Power, and decided that Wapda/power companies' undisputed claims be paid immediately. Where a dispute about the correctness of the claim exists, such claims would be referred to the government adjuster with full documentary evidence from both sides who would decide such cases within one month.
It had also been decided by the ECC that amounts of subsidy for agricultural tube-wells, payable by Wapda/federal government, be paid early. According to sources, as per the ECC's decision, the Ministry of Water and Power is required to submit a report on following points: (i) payments made to Wapda/power companies against their undisputed claims; and (ii) payment of subsidy for agriculture tube-wells.
The Water and Power Ministry claims that the federal government departments are usually a month late with payments. Punjab and NWFP are clearing their dues satisfactorily, but federal government, Balochistan government and Sindh government have been delaying payments on one pretext or another despite reconciliation with outstanding dues as on August 31, 2009 for the federal government estimated at Rs 2.179 billion, government of Sindh at Rs 16.539 billion, government of Balochistan at Rs 1.336 billion, AJK at Rs 2.200 billion, and FATA at Rs 80.243 billion.
As regards outstanding amount of subsidy to agricultural tube-wells, the position as on August 31, 2009 was as follows: GoP Rs 292.7 million, Punjab Rs 3613.4 million, NWFP including FATA Rs 76.45 million, Sindh Rs 13.415 million and Balochistan Rs 73.53 million.
According to the prescribed formula, total subsidy on agriculture tube-wells is 25 percent on electricity bills. This subsidy is equally shared by the respective province and Pepco. ie 12.5 percent each. The Ministry of Water and Power is of the view that the Punjab government is not making payment on account of 12.5 percent share of agriculture subsidy which is creating additional financial burden on public utilities in Punjab. Receivables against agriculture tube-wells in Balochistan as on August 31, 2009 were as follows: (i) GoP 40 percent Rs 2,062.94 million, and (ii) Balochistan @ 30 percent Rs 5,103.00 million
It is pertinent to mention here that Islamabad Electric Supply Company (Iesco) has served electricity disconnection notices to all government and semi-public sector defaulters, including the President House, Parliament House, AJK government offices in Islamabad, and other Ministries and hospitals, to pay their outstanding bills of Rs 4.051 billion by November 23, otherwise their power would be cut off. Sources said that other power distribution companies are also serving similar notices to provincial governments.