ISLAMABAD: The Economic Coordination Committee (ECC) has approved another Rs30 billion loan for the power sector and ordered a special audit of subsidy claims by the Utility Stores Corporation.
The meeting presided over by Finance Minister Ishaq Dar did not clear waiver of withholding tax on dividend for 870-kilometre Matiari–Lahore transmission line to be built by a Chinese company under a negotiated cost and tariff for want of in-house discussions.
Sources in the Ministry of Water and Power said the Power Holding Company (Pvt) Ltd (PHPL) would be responsible for arranging a syndicated term finance certificate issue worth Rs30bn from a consortium of commercial banks to service repayment obligations, including interest payment, of distribution companies.
The Ministry of Finance would provide sovereign guarantee for the repayment of principal loan along with interest payment.
The water and power ministry has been repeatedly agitating at the highest level against the non-payment of subsidy claims of around Rs100bn that was causing serious disturbance to the financial flows of the independent power producers and fuel suppliers, particularly Pakistan State Oil whose receivables are now touching Rs280bn.
The ministry has not only raised the issue at the level of cabinet committee on energy led by the prime minister but also recently wrote an urgent letter to the prime minister that the power sector would face disruption because of fiscal difficulties.
PHPL’s liabilities are estimated to be touching Rs360bn, in addition to fresh accumulation of circular debt worth around Rs330bn. According to power ministry sources, the subsidy estimates for the power sector had been pitched at the lower side despite repeated request for taking into account the impact of new projects brought into the system during the tenure of the current government.
In case of financial issues, the power generation plan for the coming summer could be significantly impacted because fuel suppliers and power producers have to make advance arrangements which could not be made in the presence of outstanding liabilities. The power ministry has been requesting provision of additional funds through supplementary grants in the budget.
