The Economic Co-ordination Committee (ECC) of the Cabinet has reportedly approved Private Placed Term Finance Certificates (PPTFCs) worth Rs 82 billion to resolve the problem of circular debt, but it is yet to be decided whether CCPA or Power Holding Company Limited (PHCL) will issue papers, official sources told Business Recorder.
According to initial minutes of the ECC meeting, held on May 15, 2012, the committee did not consider the summary of Ministry of Water and Power, titled "partial resolution of power sector circular debt. Source said a ministerial meeting that started in the evening at Ministry of Finance and continued till late night to decide about the mechanism to issue the PPTFCs.
However, after a couple of days, Cabinet Division issued a corrigendum, saying that the proposal of Rs 82 billion PPTFCs has been approved by the ECC, the sources added.
When contacted, a spokesman of the Ministry of Water and Power confirmed that the Cabinet Division has issued a corrigendum and the summary stands approved. In reply to a question, he said that now the Ministry of Finance is moving forward to draft Terms of Reference (ToR) to finalise the papers.
Answering another question, he said that it is yet to be decided whether Central Power Purchasing Agency (CPPA) will issue papers of PHCL, which will be purchased by the OGDCL. Replying to another question, he said, Discos have been directed to ensure hundred percent recovery of previous month from private sector along with stocks totalling Rs 54 billion.
"We are facing criticism from the Finance Ministry due to non-collection of bills from the private sector that's why we have strongly directed the Discos to ensure 125 per cent recovery," he added. The federal cabinet which is scheduled to meet on Wednesday (today) will discuss the energy situation in the country, in addition to regular agenda which was deferred last week due to paucity of time.
Official documents, available with Business Recorder revealed that the cabinet in its meeting on May 16, 2012, in view of the current scenario in the country due to the electricity shortages and the resultant unrest, exhaustively discussed the issues in a wider context. The focus in the cabinet discussion revolved around funding issues such as circular debt, lack of resources to cover the shortfall, scheduled and non-scheduled load shedding, reasons for power shortfall and ways to recover the shortfall as well as tapping alternate sources.
Finance Minister Dr Abdul Hafeez Shaikh talking about the financial aspects, stressed that the issue was not finance related only. The problem of circular debt and the larger issue of shortage of electricity and energy concerns primarily are governance issues. This needed to be tackled first. He articulated that a diagnosis has to be done in entirety to solve the problem.
He talked in detail about rising cost of electricity, the non production of cheap electricity, rising burden of subsidy on the Government, non payments by (Fata) and low slab payments (Rs 1000 flat rate in tubewell subsidy in Balochistan), huge default of Rs 50 billion (Sindh) and leakage/pilferage in all parts of the country. He said that Rs 1000 billion has been given to the electricity sector alone in the last few years.
The cabinet members highlighted the following major issues:
(i) There should be consensus between the stakeholders on the figures related to power generation; (ii) countrywide electricity theft is a major factor along with non-recovery of dues; (iii) unannounced load shedding should be done away with; (iv) with elections on the horizon load shedding will be a critical issue which needs to be addressed in the budget forthwith; (v) problem of shortage needs priority focus as unrest is growing; (vi) protection of line losses, theft, pilferage and electricity conservation is also important and a conservative group should be formed for the purpose; (vii) load management plan should be carefully and equitably designed to include rural areas and; (viii) there is no fiscal space available for oil companies (both producers and distributors) and there could be a crisis on this account soon.
The Prime Minister deliberating on the energy shortage issue conveyed his commitment to addressing the situation in the tenure of the present government. He stated that many big issues such as Diamer-Basha Dam, Mangla Raising Project, Thar Coal and IPI Pipeline had been focused successfully in the past. Alternate energy from India is in the pipeline and we have partnership with US to enhance power capacity.
The Prime Minister desired that his number one priority will be electricity and all cabinet members must resolve to address this issue. He stated that as earlier announced by the President there should be no unannounced load shedding.
The cabinet constituted a energy committee comprising Ministers Water and Power, Petroleum and Natural Resources, Deputy Chairman Planning Commission, Governor State Bank of Pakistan, shall now also include Minister for Information & Broadcasting and Minister for Kashmir Affairs & Gilgit-Baltistan. It should meet frequently and sort out energy crisis on war footing.
The cabinet also decided that there will be no financial disruption and all financial resources would be utilised till the next budget for meeting energy requirements and generating energy. An Electricity Monitoring Control Room will be set up in the Ministry of Water and Power to monitor the distribution/supply of electricity, to be visited by members of the cabinet on rotation basis.
The ministry has not set up any monitoring room. The cabinet also constituted a committee comprising Ministers for Finance, Law, Interior, Information and Petroleum to expedite and recover electricity dues and recommend appropriate steps/legislation in theft/pilferage cases.