ECC directs to hold complete audit of Power Sector

Federal Minister for Finance, Revenue and Economic Affairs Asad Umar chaired the meeting of the Economic Coordination Committee of the Cabinet (ECC) this morning at the Cabinet Division.

The meeting received a presentation on the issue of circular debt that has accumulated over the years to a hefty sum of Rs.1188 billion. The Committee was briefed on the impact of Industrial Support Package, Azad Jammu Kashmir subsidized units, Balochistan agricultural tubewells, FATA receivables, and the impact of existing time lag on tariff determination mechanism of NEPRA.

The ECC observed that the PML-N government had taken the decision to discontinue the provision of subsidized power supply to AJK in budget 2018 and the previous government had also decided to discontinue the industrial Support package. The Committee decided to bring the facts to the attention of the Federal Cabinet.

On the issue of recoveries, it was decided that meters of those persons, Departments and Ministries or any private entity will be disconnected if they fail to pay their bills for consecutive three months. On the payment of their bills they will be provided prepaid meters.

Chairman ECC directed the Power Division to take strict legal action against those officials and individual who are involved in power theft and to not show any leniency on the issue.

The ECC also decided that to cope up with the issue of urea fertilizer shortage in the country, three urea manufacturing plants that are  presently in-operational will be supplied RLNG  for a period of four months starting from September with 50% cost of RLNG being picked up by the government and the balance 50% by the respective manufacturing units. These Plants will utilize their full potential and the decision to import fertilizer will be taken after taking into account their production capacity.

The ECC directed Ministry of Industries and Production to:

(i)        workout figures/data about actual production  and consumption of the urea during 2017-18 and the estimates for 2018-19, in consultation with Ministry of National Food Security & Research and submit a report thereof to the ECC in its next meeting.  In case of any  shortfall in consumption of urea, the reasons may also be identified in the report,
(ii)       facilitate the operationalization of  three closed fertilizer plants i.e. Fatimafert, Agritech and Pakarab (in case of the latter only to the extent of urea production amounting to 8000 tons per month) on 100% RLNG for urea production for four months (September – December 2018),
(iii)      workout total subsidy impact on running of all three plants i.e. Fatimafert, Agritech and Pakarab on 100% RLNG with 50% of subsidy being borne by the Government while remaining 50% being picked up by the respective fertilizer plants; and
(iv)      workout the windfall gains reaped by the fertilizer industry, in light of the net Variable Contribution Magins, as a result of charging higher rates as well as exports during 2017-18 and 2018-19.  The windfall gains may be adjusted against the subsidy outstanding in favour of fertilizer industry, under the fertilizer subsidy schemes which were in vogue during the preceding 03 financial years.

On the presentation of the Special Audit Report on payment of Circular Debt of Rs. 480 billion by the Department of Auditor General of Pakistan, the ECC directed to hold an Operational and Financial Audit of DISCOs. It was decided that the Auditor General of Pakistan will complete the Audit of 4 highest loss making Discos in one month’s time and the audit of the entire sector will be completed in two month’s time after the approval from Cabinet.
The ECC also considered the Update on the issue of sale of K-Electric and issued directions to the Departments concerned to formulate their recommendations for CCOP.

Posted on: 2018-09-03T20:28:00+05:00