ECC decides to defer gas price increase, summons report on circular debt

The government of Pakistan has decided to defer the increase in gas prices, which was to be decided in the meeting of the Economic Coordination Committee scheduled for Wednesday August 29, 2018.

Due to the growing circular debt of power companies, and the largely unchanged gas prices during the last government’s tenure, it was expected that the newly elected government would raise the prices of gas to cater to the grievances of gas transmission and distribution companies that are now on the verge of financial default.

Chairperson of the meeting, Finance Minister Asad Umar, has summoned a report on the issue of the rising circular debt that has been troubling the power sector in particular, and a decision on the matter is expected in the next week.

According to the data compiled up to 31st July 2018 by the Ministry of Energy, it was brought to the notice of the ECC that the amount of Circular debt is standing at Rs. 596 billion with an increase of Rs. 30 billion in the last month (i.e. July), in addition to the Rs. 582 billion parked with the Power Holding companies under the STFF arrangements. Total circular debt has now reached Rs 1,188 billion.

The ECC has identified 5-6 key areas that accounted for the pile-up of these liabilities and has formed different committees to work upon the reasons besides formulating their suggestions, which are to be presented in the next ECC meeting that is to be scheduled in the next week.

In addition, the summary for Pakistan State Oil financial health and liquidity position was deferred as the issue is closely linked with Circular Debt, therefore the matter would be considered subsequently.

ECC will later present its suggestions to the Cabinet for the approval along with a decision on the future course of action. Chairman ECC stated that all facts would be shared with the public to make decision making a transparent and inclusive exercise.

Chairman ECC also expressed his displeasure on the issue of fertilizer pricing and the decision to export it, which was taken by the previous government saying that it was totally against the interests of the farmer community.

He said that the interest of the poor farmers should be the supreme motivation for taking such decisions.

The ECC was informed that the total requirement of fertilizer for the country for this sowing season would be around 600,000 tons.

The ECC directed that a committee will be formed under the chairmanship of Advisor Industry and Production Mr. Abdul Razak Dawood to hold discussions with the local fertilizer industry to ascertain the total domestic production.

The committee will present its recommendations in the next ECC meeting following which a decision will be made regarding the import of urea.

Posted on: 2018-08-29T17:21:00+05:00