ECC approves Rs100b guarantee for PSO

Allows recovery of Rs1.72 tariff hike from K-Electric consumers

ISLAMABAD:

The interim government on Friday approved sovereign guarantees of Rs100 billion in favour of Pakistan State Oil (PSO) to help the company avoid bankruptcy and also allowed recovery of Rs1.72 per unit hike in electricity prices from K-Electric (KE) consumers.

The decisions were made by the Economic Coordination Committee (ECC) of the cabinet that once again failed to reach an agreement on increasing gas prices for fertiliser plants after withdrawing subsidies.

The ECC reached an understanding that subsidised gas supplies would continue till the end of December. But it did not formalise the decision in the absence of a summary from the ministry concerned.

The ECC approved a summary submitted by the Ministry of Energy for the extension of the government’s guarantee ceiling of Rs100 billion in favour of PSO till December 2024, according to a statement of the Ministry of Finance. It added that the extension would be subject to approval of terms and conditions of each financing facility by the Finance Division upon renewal.

PSO faces an acute liquidity crisis as its receivables have piled up to Rs755 billion due to the circular debt in gas and power sectors. The company is often at risk of default due to non-payment.

Read PIA commits to paying Rs1.35b to PSO

The ECC approved a request of the government of Punjab, which itself is running a deficit, to give a Rs20 billion interest-free loan to a company named Green Corporate Initiative (Private) Limited. No details were provided about the ownership of the company.

The finance ministry stated that “a proposal for disbursement of Rs20 billion credited to the federal government account by the Finance Department, Government of Punjab for further disbursement to Green Corporative Initiative Ltd for the Green Pakistan Initiative was also discussed”. It added that the ECC approved the disbursement with the observation that the provincial government may directly engage with the companies operating under the Green Pakistan Initiative for future disbursements.

The ECC also took up a summary submitted by the Ministry of Energy regarding uniform quarterly tariff adjustments (QTA) for KE. It approved an increase of Rs1.72 per unit for KE consumers.

It was decided that the tariff rationalisation of Rs1.25 per unit by way of adjustments for KE in line with the uniform QTA application guidelines already issued to the National Electric Power Regulatory Authority (Nepra), shall be applicable to the consumption of July, August and September 2023 to be recovered from consumers in December 2023, January 2024 and February 2024, respectively.

Moreover, a hike of 47 paisa per unit, already approved for KE consumers, in line with the uniform QTA application guidelines, shall be applicable to the consumption of April, May and June 2023 to be recovered from KE consumers in December 2023, January 2024 and February 2024, respectively.

The ECC decided to provide a grant of Rs20,000 per month to 8,000 people working at Chaman border, subject to the condition that the cost would be borne by the provincial government.

It asked the Benazir Income Support Programme (BISP) to examine the cases of 8,000 registered daily-wage workers employed at the Chaman border to see whether they were already in its system, and provide support to the eligible ones from its allocated budget in consultation with the Finance Department, Government of Balochistan for later reimbursement of the amount to be spent on providing six-month support to the daily-wage workers, according to the finance ministry.

A summary submitted by the Ministry of Interior for a technical supplementary grant of Rs47.45 million within the sanctioned budget for repair and maintenance, was considered and approved. The money would be used on the repair of helicopters operated by the Pakistan Rangers Sindh.

The ECC also considered a summary submitted by the Ministry of Information Technology and Telecommunication and approved the release of Rs5 billion as bridge financing from the R&D Fund for the Digital Information Infrastructure project.

Published in The Express Tribune, November 11^th, 2023.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.