Pepco withholds tax from provinces

Express April 23, 2010

ISLAMABAD: The Pakistan Electric Power Company (Pepco) has withheld billions of rupees of the provinces which it had collected in the shape of electricity duty.

The issue was discussed in a high-level meeting of the National Fiscal Monitoring Committee, according to documents available with The Express Tribune. The federal government, after thorough discussions, directed Pepco to immediately transfer the electricity duty to the governments of Punjab, Khyber- Pakhtunkhwa and Balochistan. In future, the collected tax will be transferred by Pepco within the timeframe set under the rules, the document says.

The meeting decided that the provincial governments will pay their outstanding dues for power consumption to Pepco within 30 days after reconciling the figures with the power utility. As a goodwill gesture, Balochistan will pay 20 per cent of Pepco dues as down-payment subject to adjustment after reconciliation. Besides, the meeting decided that the provincial governments will identify priority connections and give a list in this regard to Pepco as soon as possible.

It also decided that the federal government will be the final authority or adjuster to settle disputes between the provinces and Pepco about reconciling the amounts of disputed power bills. They decided that a memorandum of understanding (MoU) will be signed between Pepco and the provinces for giving authority to the federal government to deduct the reconciled amount at source. During the meeting, Punjab finance secretary said that Pepco was committing a constitutional violation by withholding the amount of electricity duty collected on behalf of the provincial governments.

In response, Pepco director general commercial said that total Pepco dues which the provincial governments have to pay are about Rs40.43 billion. He said that Punjab has to pay Rs8.34 billion, Sindh Rs21.5 billion, Khyber Pakhtunkhwa Rs1.22 billion and Balochistan Rs9.37 billion. The Pepco representative said that the company has to recover a huge amount from the provincial governments while it owes a very small amount to the provinces.

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