However, sources in Finance Division told Business Recorder that the ECC which is scheduled to meet on Wednesday (today) will approve a new mechanism/ criterion for disbursement of payments to the power generators in the presence of the subject report to be developed by a Committee constituted by the ECC of the Cabinet. The sources said, Cabinet in its meeting had decided to freeze any increase in consumer bills initially for a period of three months, i.e., from April 2020, to June 2020 including freezing any changes in tariff rate on quarterly or monthly basis. The impact of build up for freezing both Fuel Price Adjustments (FPA) and Quarterly Tariff Adjustments (QTA) was worked out as Rs 150 billion. Additionally, for the domestic consumers (consuming upto 300 units), the electricity bill for the months of March, April and May 2020 would be received in 3 installments, the financial impact worked out was Rs. 74 billion. In order to mitigate the cash flow impact of the above-mentioned decisions, ECC of the Cabinet approved the following:(i) to provide GoP Guarantee for Rs. 200 billion Islamic Sukuk facility to mitigate the negative cash flow impact due to freezing/not passing on the monthly FPA and QTA to consumers, which is currently in process of disbursement;(ii) to provide additional Guarantee of Rs.100 billion for raising additional cash from commercial banks as Syndicated Term Finance Facility (STFF) through Power Holding Limited to mitigate cash flow impact resulting out of staggering of consumer billing for 3 months, which was also in its advanced stage of disbursement by end of April, 2020.
The sources further stated that in the recently unveiled report titled "Power Sector Audit Report" prepared by the committee for the power sector audit, circular debt resolution and Future road map has been presented to the Government. This report alleges excess payment to IPPs as a consequence of tariff determinations and systemic failures. Considering the importance of the findings of the report which has been discussed in the cabinet, the Power Division feels that the disbursal of the amount be done in a manner that does not necessarily seem to be in contradiction of the report.
Power Division has to disburse Rs. 300 billion (Rs. 200 billion +Rs. 100 billion) through CPPA-G to Power sector entities including the power generators in private and public sector for system operation during the summer season.
"Power Division has requested the ECC that since the sector is already going through serious liquidity issues due to the current Covid-19 pandemic, for system operations payments are required to be made on emergent basis," the sources maintained.