ECC approves hiking power baseline tariff by Rs7.91/unit

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet Monday granted approval for hiking baseline tariff of electricity to the tune of Rs7.91 per unit on an average in a staggered manner, starting from July 1, 2022.

This tariff will be implemented in three phases and the first hike will be implemented from July 1, 2022. The Ministry of Power tabled a summary before the ECC and proposed two options in line with NEPRA determined tariff to place uniform tariff. Under option-1, it is proposed to pass on Rs7.91 per unit on national average basis to the consumers with effect from July 1, 2022. This will result in targeted tariff differential subsidy of Rs184 billion.

Under option-2, it is proposed to pass on Rs6.25 per unit increase to consumer with effect from July 1, 2022 and remaining Rs 1.66 per unit to be passed on consumers with effect from October 1, 2022. This option will result in increased tariff differential subsidy to the tune of Rs231 billion. For Karachi Electric (KE), the same proposals were tabled before the ECC.

However, the ECC approved passing on the baseline tariff and decided to implement it in three phases, so the Ministry of Power was directed to work out details. According to official announcement made after the ECC meeting on Monday, the Ministry of Energy, Power Division submitted a summary on tariff rationalization for power sector. The ECC, after detailed discussion, approved the annual rebasing plan with certain modifications. The ECC also directed Power Division to recommend subsidy reform adjustment for unprotected consumers which was approved in December 2021 but not implemented.

Another important summary for establishment of Revolving Fund for repayment of CPEC-related Chinese power companies was deferred in today’s meeting. Federal Minister for Finance and Revenue Miftah Ismail presided over the meeting of the ECC of the Cabinet at Finance Division on Monday.

The Ministry of Industries and Production submitted a summary for extension ofPrime Minister’s Relief Package-2020 and fixation of ghee prices at Utility Stores Corporation.

The ECC approved extension in the Prime Minister’s Relief Package-2020 up to June 30, 2022 on all five essential items and allowed that ghee shall be sold on all USC outlets throughout the country for Rs300/kg from June 9, 2022 irrespective of the higher market prices. The ECC further approved allocation of funds Rs3,447.60 million in favour of USC through supplementary grant.

The Ministry of Aviation submitted a summary for payment of Sales Tax for leased aircrafts on instalments basis. It was informed that Pakistan International Airline Corporation Limited (PIACL) is going to induct four (4) A320 Aircrafts on dry lease basis for the period of 72 months. Due to financial constraints, PIACL is not in a position to pay GST on the total rental value in lump sum. The ECC after considering incoming Haj 2022 and financial constraints of PIACL approved payment of GST at the rate of 17% i.e. Rs1.596 billion approximately on total rental value of Rs9.388 billion of four A320 leased aircrafts on monthly instalments over the lease term starting from the date of arrival of aircrafts, including one already arrived.

The Ministry of Communications presented a summary on requirement of additional funds for construction of Gilgit-Shandoor road, N-140. Rs2,000 million were allocated in the Federal Budget 2021-22, whereas actual requirement of funds to acquire land and make payments of certified liabilities is Rs6,000 million. The ECC accorded approval of Rs4,000 million as additional funds for the project “Construction of Gilgit- Shandoor Road, N-140.”

The Petroleum Division submitted a summary for enhancement of oil and gas production from TAL blocks vis-a-vis provisional allocation of gas price. Keeping in view the shortage of gas in the country, the ECC conditionally allowed M/s MOL to commence production from Tal block namely Mamikhel South. TAL JV was given the 2012 Policy Price on provisional basis till further decision of the Govt.

The ECC also considered and approved revised Ex-officio Steering Committee of the Targeted Commodity Subsidy Program (TCSP) to oversee the implementation of Commodity Subsidy Programme with Minister of Poverty Alleviation and social Safety as chairperson. The ECC also approved following Supplementary/ Technical Supplementary Grants.

i. Rs25.61 billion for Petroleum Division for the disbursement of Price Differential Claims (PDCs) to OMCs/Refineries for the first fortnight of June, 2022 and additional requirements of previous fortnight.

ii. Rs36 billion in favour of Petroleum Division to maintain the sustainability of the LNG supply chain as well as import of petroleum products. The allocated amount shall be released to SNGL against its pending claims in respect of cost of RLNG diversion to domestic sector for setting off the payable of PSO and PPL against RLNG supply.

iii. Rs50 billion for Power Division as advance against future subsidy claims of Power Sector.

iv. Rs130 billion for ways and means advances availed by provincial governments.

v. Rs162 million in favour of Department of Auditor General of Pakistan.

vi. Rs3.5 billion to Govt of Sindh to offset losses of abolition of Octri and Zila Tax.

vii. Rs1,520 million to FBR for the project titled “Development of Integrated Transit Trade Management System (ITTMS).

viii. Rs1.5 billion and Rs709 million in favour of Ministry of Interior.

ix. Rs535.8 million in favour of Ministry of Information and Broadcasting.

x. Rs300 million in favour of Ministry of Information Technology and Telecommunication.

xi. Rs7.4 million for Ministry of Law and Justice.

xii. Rs1.5 billion for National Poverty Graduation Program (NPGP).

xiii. Rs668.7 million for Ministry of States and Frontier Regions.

xiv. Rs26 Million to Civil Services Academy, Lahore.

xv. Rs181.495 million to pay off the pending liabilities of advertising agencies against media campaign of Kamyab Pakistan Programme (KPP).