The Economic Co-ordination Committee (ECC) of the Cabinet has decided to provide Rs 30 billion sovereign guarantee to the power sector for settlement of liabilities of distribution companies on account of subsidies. A participant of the meeting said that Finance Division would extend sovereign guarantee and pick both the principal and interest amount for the loan to be taken by the power holding company.
He also cited discrepancy in the subsidy claims of the Finance Division and those of the Ministry of Water, which may require some settlement. Another official on condition of anonymity said that the power sector may require more funds in the last year before the general election for providing relief in load shedding, particularly in rural areas.
A meeting of the ECC presided over by Finance Minister Ishaq Dar was presented a proposal by the Ministry of Water and Power along with a presentation detailing the performance of the sector as well as subsidy claims and arrears. Earlier, the secretary Water & Power made a presentation on the performance of power sector for the years 2014-16 and maintained that there has been considerable decrease in load shedding in both urban and rural areas from almost 12-14 hours in 2013 to four hours in December 2016. There is no load shedding for industrial consumers and recovery rate of billed amount was as high as 93 per cent, which has benefited the national exchequer by Rs 93 billion.
He also claimed that transmission and distribution losses have been brought down the 17.80 percent - the lowest ever - by 2016, again benefiting the exchequer by Rs 23 billion. Annual transmission and distribution losses stood at 23 percent in 2016 which saved an amount of Rs 116 billion for the nation. The secretary water and power further said that efforts are afoot towards achieving zero percent load shedding.
The meeting directed the ministry to ensure completion of remaining development and reform initiatives as per timelines. Another proposal by the Ministry of Water and Power on withholding tax on dividend for HVDC Transmission Line from Matiari to Lahore was deferred for inter-ministerial discussion and re-submission to the ECC thereafter.
The ECC refused to approve the demand of the Ministry of Industries and Production for provision of subsidy on essential commodities and directed for a special audit of previous purchases of essential commodities by the Utility Stores Corporation.
The chair directed for a special audit of the sale-purchase prices of certain items within 15 days to determine the need for release of the amount of subsidy. The Ministry of Industries and Production requested for release of Rs 1.035 billion for USC on account of maintaining subsidised prices of 11 essential items.