ISLAMABAD: The Ministry of Finance has refused to shoulder the burden of Rs50 billion waived from electricity bills of the Sindh government, insisting that the Ministry of Water and Power will have to bear the impact of write-off, officials say.
This could be an additional burden on power distribution companies that were already facing financial crunch and different surcharges including the debt servicing surcharge were imposed on electricity consumers to bail out the inefficient companies.
The Economic Coordination Committee (ECC) in its meeting held on November 25 also agreed that the Ministry of Water and Power should absorb the financial impact and prevented it from claiming funds from the Ministry of Finance and Federal Board of Revenue (FBR) in that connection.
During the discussion, the Ministry of Finance pointed out that according to a decision of the Council of Common Interests (CCI), the federal adjuster would make deduction at source of reconciled bills of the distribution companies and provincial governments.
However, the ministry said a fresh arrangement with the Sindh government that waived Rs50 billion from its outstanding bills was a deviation from the CCI’s decision.
Moreover, the rationale behind the settlement had not been clearly spelled out, neither any rule nor a policy suggested to write off Rs50.18 billion out of total arrears of Rs77.54 billion.
The finance ministry argued that the amount billed to the Sindh government reflected the electricity tariff based on National Electric Power Regulatory Authority’s (Nepra) determination with notification from the central government. “This could not be adjusted at a later date nor does any precedent exists like the one proposed by the Ministry of Water and Power.” Responding to the arguments, Water and Power Secretary Younus Dagha revealed that the CCI had decided to make deduction at source of 25% of electricity charges pertaining to the provincial government departments depending on reconciliation of bills between the distribution companies and Sindh government.
Furthermore, he said, the amount deducted at source was returned by the federal adjuster. The proposed adjustment was 40% of the total claims, he said, clarifying the reconciling of bills was not a new practice as it was undertaken with all provinces regularly. The Ministry of Water and Power further told the ECC that several attempts had been made since 2010 to settle the outstanding receivables through negotiations or deduction at source.
Published in The Express Tribune, December 8th, 2016.