ECC allows WAPDA to raise Rs17.5 billion loan on govt guarantee

ISLAMABAD: Economic Coordination Committee (ECC) of the Cabinet on Wednesday allowed the Water and Power Development Authority to raise a loan of Rs17.5 billion from local banks to bridge its finances.

“On the request of the Ministry of Water Resources, ECC granted approval to WAPDA to raise loan for the settlement of the financial facility amounting Rs17.500 billion with one-year tenure and government of Pakistan guarantee,” a government statement said.

Abdul Hafeez Shaikh, adviser to the Prime Minister on finance, chaired the ECC meeting. “Clearance under Prudential Regulations R-4(clause 1a and 2) from the State Bank of Pakistan to disburse the facility initially against a letter of comfort was also granted,” the statement added.

ECC also asked ministry of finance to explore the possibilities for improving Pakistan State Oil’s (PSO) liquidity position “as exchange losses of around Rs28 billion have incurred on FE-25 loans by the company”.

The loans were acquired under the instructions of ministry of finance for financing the PSO’s oil import operations. “The finance ministry assured the ECC of utilisation of all possible funding options in this fiscal year and added that any deficiency in the funds should be entertained in the upcoming budget,” the statement said.

The ECC also gave go-ahead for allocation of gas from PGNiG’s Rizq Gas Field to Sui Southern Gas Company Ltd (SSGC). The ECC was briefed that currently two wells, Rizq-1 and Rizq-2, were producing 16 MMFCD gas from the field, which were allocated to SSGC, whereas Rizq-3, currently under drilling, was expected to add another 9 to 10 MMCFD gas to the existing production. “Upon completion of this well, the cumulative gas production from this gas field is expected to increase up to 25 MMCFD, while the price of the gas shall be according to the applicable petroleum policy,” the statement said. The ECC also approved the constitution of a Price Negotiation Committee (PNC) for Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project.

The PNC will be consisted of secretary ministry of energy (petroleum division) as chairman and secretary finance or his nominee, joint secretary ministry of energy (power division), director general (gas)/ director (gas) and managing director SSGCL as members.

Pakistan faces an acute gas shortfall as its reserves are dwindling. It is estimated that domestic gas supplies may deplete by more than 28 percent to mere 2.3bcfd in 2024 from the existing 3.2bcfd, worsening the shortage for domestic and industrial consumers including urea and power producers to 5.5bcfd as the demand has been projected to jump 11.6 percent to 7.7bcfd from the current 6.9bcfd.

On the demand moved by the ministry of industries and production for Rs3.02 billion for the payment of outstanding dues of the SSGC by Pakistan Steel Mills on account of gas bills, the ECC directed the concerned authorities to constitute a three-member committee under the chairmanship of secretary finance to find out a feasible solution.

The committee also authorised a technical supplementary grant of Rs1 billion for the establishment of Pakistan Tourism Development Endowment Fund under public account.

The finance adviser however sought a ‘tourism development’ and ‘soft image promotion’ plan from Pakistan Tourism Development Corporation in the next meeting of the ECC. Furthermore it granted extension of Government of Pakistan guarantee against credit facility of National Bank of Pakistan worth Rs5 billion in favour of Utility Stores Corporation of Pakistan.