ISLAMABAD: The government has granted unparalleled tax breaks to a $2.1 billion power transmission line being executed by Chinese contractors and approved a Rs193 billion financing arrangement to meet liabilities of the power sector.
These decisions were taken at a hurriedly called meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister Ishaq Dar.
The execution of the 878-kilometre Matiari-Lahore transmission line project worth about $2.1 billion was facing troubles because of differences among stakeholders over taxation issues and the revolving fund for payments to Chinese contractors.
The Federal Board of Revenue (FBR) was insisting on higher taxes under the existing tax laws while the power ministry demanded lower rates.
However, Dar did not approve the power ministry’s request for tax breaks at the last ECC meeting held on July 18. He had directed the water and power secretary to get back to the ECC with a consensus after reviewing the Standard Implementation Agreement (SIA) for private-sector transmission lines and project-specific Transmission Services Agreement (TSA) in consultation with the heads of the law ministry, FBR and power regulator.
The Economic Coordination Committee (ECC) has approved four proposals of the Ministry of Water and Power for the issuance of new sovereign guarantees of Ministry of Finance in respect of Fresh Syndicated Term Finance Facilities for Power Holding (Private) Limited in order to set off/adjust existing facilities.
The ECC also approved a proposal of the Ministry of Water and Power, regarding an existing Term Finance Facility for Power Holding (Private) Limited, to restructure the facility by extending the tenor of the facility from seven years to ten years, including extension in grace period from three years to six years. The ECC, after considering and deliberating upon another proposal of the Ministry of Water and Power, approved the Standard Implementation Agreement (SIA) for transmission line projects under Policy Framework for Private Sector Transmission Line Projects, 2015. As per the same proposal, the ECC also approved the TSA for HVDC Transmission Project (*660 Kv Matiari-Lahore).
