ECC green-lights continuation of subsidised energy to export sector

ISLAMABAD: Country’s top economic panel on Monday green-lit continuation of subsidised electricity and RLNG supply to export sector and utilisation of power for the incremental package for industries at an estimated cost of Rs60 billion.

The Economic Coordination Committee of the Cabinet (ECC) met under the Chairmanship of Federal Minister for Finance and Revenues Shaukat Tarin.

The government had been supplying electricity to industries at a rate of 9 cents per kwh and gas at a rate of $6.5 MMBTU. It hiked the price of electricity from 7.5 cents to 9 cents in the last fiscal year.

Ministry of Finance in its official press release did not share any details of cost of the subsidy amount. However, sources said the government approved Rs26 billion for providing electricity to export-oriented industries at concessional rates. Moreover, Rs15 billion has also been approved for the industrial support package.

The government has sanctioned Rs10 billion for K- Electric under industrial support package for the current fiscal year. For the provision of subsidy to the LNG sector for providing gas at lower rates to industry, the ECC approved Rs10 billion in Monday’s meeting. In totality the government has approved a subsidy of Rs60 billion for providing electricity and gas for the whole country including consumers getting power from K- Electric.

According to an official statement, Ministry of Commerce presented a summary regarding continuation of concessional rates of electricity and RLNG to export-oriented sectors. Secretary Commerce briefed the Committee that extension of concessional rates of electricity and RLNG was important for ensuring a sustained increase in exports by providing energy at regionally competitive rates.

After due deliberations, the ECC approved the continuation of energy subsidy for export-oriented sectors to support the momentum of growth in exports during FY2021-22. In his remarks, the finance minister emphasised the need to incentivize export-oriented sectors in order to take exports to the next level. In the same breath, Tarin stressed the need to rationalise usage of energy inputs.

For this purpose, the ECC constituted a sub-committee comprising Minister for Energy, Minister for Industries & Production, Adviser on Commerce, Deputy Chairman Planning Commission, Additional Secretary Finance Division and other relevant officials for presenting a plan to resolve the issue of continued use of gas by some units for power generation and non-cooperation in audit of such use. The sub-committee was directed to present its recommendations before ECC within 30 days for further deliberation.

The ECC also considered and gave go-ahead to a summary presented by the Power Division for extension of incremental consumption package for K-Electric industrial consumers of X-WAPDA DISCOs & K-Electric and application of incremental consumption package for BI (Non ToU) consumers of X-WAPDA DISCOs and K-Electric at the rate of Rs12.96/kwh from July 1, 2021 to December 21, 2021.

The ECC also green-signalled another summary by the Petroleum Division regarding NOC for issuance of the Parent Company Guarantees/Corporate Guarantees by each of the consortium companies, on a joint and several basis, in favour of ADNOC and SCFEA to pursue international exploration and production opportunity in Abu-Dhabi, United Arab Emirates.

Federal Minister for Privatization Muhammad Mian Soomro, Federal Minister for National Food Security & Research Syed Fakhar Imam, Federal Minister for Industries and Production Makhdoom Khusro Bakhtiar, Federal Minister for Energy Muhammad Hammad Azhar, Federal Minister for Economic Affairs Division Omar Ayub Khan, Adviser to the PM on Commerce Abdul Razak Dawood, Adviser to the PM on Institutional Reforms and Austerity Dr Ishrat Hussain, Special Adviser to PM on Finance and Revenue Dr Waqar Masood, Special Adviser to PM on Power & Petroleum Tabish Gauhar, Federal Secretary Finance, Secretary M/o Industries and Production, Secretary M/o NFS&R, Secretary Power, Secretary Petroleum, Chairman FBR and other senior officers attended the meeting. Governor SBP Dr Reza Baqir also participated through videolink.