Revenue requirements of Discos: Nepra required to incorporate debt servicing on actual basis

The Economic Co-ordination Committee (ECC) of the Cabinet approved the issuance of policy guidelines to Nepra to incorporate debt servicing on an actual basis in revenue requirements of power Distribution Companies (Discos), which would be adjusted in their tariffs on an annual basis. The ECC meeting presided over by Finance Minister Ishaq Dar considered and approved a summary of Ministry of Water & Power to this effect.
The ECC also approved the summary of the Ministry of Water & Power for the issuance of policy guidelines to Nepra to rationalise tariff and differential losses target of 12.82 percent to 15.75 percent by using an analogy that was employed as tool for tariff for fiscal year 2012-13. According to one of the participants of the meeting, the Finance Minister inquired from the representatives of Water and Power Ministry about these measures' impact on consumers. The official added that Water and Power Ministry claimed that these measures would have no financial impact on electricity consumers.
According to a statement, the Discos claim T&D losses of 17.55 percent for the year 2013-14. The Minister for Water and Power informed the ECC that the government in the last one year has made some significant improvements in making recoveries and containing line losses up to the extent of 2 percent and will continue to make progress in this regard.
The ECC also approved the allocation of gas from SARA and SURI gas fields located in district Ghotki, Sindh, to Genco-II at mutually agreed terms and conditions. It is estimated that 14 to 15 BCF gas reserves are lying in the gas field and it requires investment of around $6 to $8 million. The ECC also approved a summary for re-allocation of low BTU gas from the Bahu Gas Field to Fauji Kabirawala Power Company Limited (FKPCL). Keeping in view the prevalent electricity crisis in the country and higher dispatch order low BTU gas from the Bahu Gas Field will be allocated to this project for the remaining term of its PPA ie: October 29, 2029, to ensure its smooth operation and to avoid conversion of the Project on any expensive alternate liquid fuel, which would be an unaffordable option given the prevalent energy mix scenario in the country.
The ECC also approved the summary of the Revenue Division for transfer of tax exemption given to PSA Gwadar Pte Limited as per ECC decision in case No 13/1/2007 dated 1-2-2007 to China Overseas Ports Holding Company Limited for the remaining period of the term. The ECC also approved the summary of Revenue Division for exemption from income tax to profits and gains derived by coal mining projects in Sindh supplying coal to power generation projects only. The meeting was also attended by Pervez Rasheed, Minister for Information, Broadcasting and National Heritage, Khawaja Asif, Minister for Water and Power, Ahsan Iqbal, Minister for Planning and Development, Zahid Hamid, Minister for Science and Technology, Abbas Khan Afridi, Minister for Textile Industry, Anusha Rehman, Minister of State for IT, Muhammad Zubair, Chairman Privatisation Commission, Federal Secretaries and senior officials.