ECC okays Rs167bn power sector debt rescheduling
7
ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Wednesday approved rescheduling of about Rs167 billion power sector debt.
A meeting of the ECC, presided over by PM’s adviser on finance and revenue, Dr Abdul Hafeez Shaikh increased sale margins of oil marketing companies (OMCs) and dealers and ordered release of 1,107 imported vehicles impounded at ports for months.
It also allowed a 6.5 per cent increase in dealers’ margins and OMCs commission on sale of petrol and high speed diesel with immediate effect despite opposition from the Oil and Gas Regulatory Authority (Ogra) and the Planning Commission.
The OMCs’ margin was increased by 17 paisa per litre of both HSD and petrol instead of 25 paisa per litre proposed by the petroleum division. They would now charge Rs2.81 per litre commission instead of existing rate of Rs2.64.
Likewise, the dealer’s commission was increased by 22 paisa per litre on petrol and 18 paisa on HSD instead of 34 paisa and 29 paisa per litre requested by the petroleum division. The dealers would now charge Rs3.70 commission on every litre of petrol and Rs3.11 on HSD.
Increases sale margins of OMCs and orders release of over 1,100 vehicles impounded at ports for months
The petroleum division had worked out the increase in margins on the basis of more than 8.5pc rate of inflation for the period from April 2018 to May 2019. The planning commission, however, challenged this, saying the inflation (CPI-General) during the fiscal year ending June 2019 was about 6.5pc and increase should not be allowed on the basis of selective months.
The ECC decided that in future the margins of OMCs and dealers would be worked out on the basis of annual average inflation of fiscal year, and also asked relevant stakeholders, including the petroleum, finance, planning, industry and production divisions, Bureau of Statistics and Ogra to finalise recommendations within two months and resubmit the case.
The committee approved a proposal to raise finance facilities of Rs136.454bn and Rs30bn for adjustment of existing finance facilities of the Power Holding Limited (PHL) with a consortium of local commercial banks in pursuance of separate ECC decisions taken in November 2016 and February 2017 for repayment of liabilities of Discos.
The meeting was told that terms and conditions of the PHL finance facilities had a five-year tenure, inclusive of two-year grace period which had been completed and the instalment payments on account of principal portion had become payable.
The finance ministry said that under the latest arrangement approved by the ECC, the principal instalment payments would be deferred for further two years from the date of execution of fresh facilities.
The ECC took up a summary of the commerce division on import of used vehicles under personal baggage, transfer of residence and gift schemes which require the payment of duties and taxes through foreign exchange arranged by Pakistani nationals themselves or local recipients producing proof of conversion of foreign remittance to local currency.
The committee allowed importers to meet any shortfall in arrangement of required foreign remittance for payment of duties and taxes through local sources in case of a scenario where the Pak rupee depreciated or the government increased import duties and taxes after the receipt of remittance and before the filing of the goods declaration, resulting in shortfall of remitted amount vis-a-vis payable duties and taxes.
This would help clear up a total of 1,017 vehicles currently stuck at Karachi Port because either no foreign remittance had been received or the remitted amount had been rendered insufficient due to depreciation of the rupee before the filing of goods declaration or increase in the rate of duty in the Finance Act, 2019.
The ECC gave ex-post approval to an SRO issued by Commerce Division in August 2019 for extending till August 31 the implementation of quality standards on the import of solar PV equipment.
The committee authorised the ministry of communications and the National Highway Authority to proceed for procurement of consultancy services for Section-III Kalkatak-Chitral (48km) under the Chakdara-Chitral Road Project (N-45).
It approved a proposal by the finance division for acquisition of 8.5pc additional shares of EPCL South Africa by Packages Pakistan through AHL Mauritius by enhancing Standby Letter of Credit by $2.7 million. This would bring the aggregate investment of Packages Limited to $17.7m. However, the decision stipulated that due to the current foreign exchange constraints, Packages Ltd might arrange the required foreign exchange from abroad.
The ECC took up separate proposals of the defence division for one technical supplementary grant of Rs6.210bn to pay for recurring cost of the Special Security Division (North) and another technical supplementary grant of Rs4.966bn to pay for Internal Security Duty Allowance to the army troops deployed at the western border.
It asked the defence division to bring up the matter in the next ECC meeting after having discussed and finalised with the finance division the mode of arranging funds for the subject supplementary grants.
Published in Dawn, November 7th, 2019
