ISLAMABAD: Caught between the public criticism of repeated tariff increases and IMF compulsions, the Economic Coordination Committee (ECC) of the cabinet on Wednesday formed a two-member committee to suggest a revised plan for charging about Rs17 billion additional fuel cost from electricity consumers.

A meeting of the ECC presided over by Finance Minister Dr Abdul Hafeez Shaikh also approved revised eligibility criteria, subsidy structure and public-private partnership for Naya Pakistan Housing Programme.

In a summary, the Power Division had proposed recovery of Rs2.42 per unit additional fuel cost adjustment (FCA) from domestic consumers using up to 300 units and private agriculture consumers and Rs1.17 per unit additional FCA from all other consumers during the current month (March). Likewise, it had proposed Rs2.86 per unit additional FCA from domestic consumers using up to 300 units and private agriculture consumers and Rs1.098 per unit from all other consumers in April.

The Power Division told the meeting that the power regulator had determined these increases on account of FCAs from November 2019 to June 2020 for recovery in August and September 2020, but could not be charged as per the prime minister’s decision to keep the prices unchanged owing to the Covid-19 pandemic.

The Power Division was of the opinion that any delay in charging FCA would result in cash shortfall of around Rs17bn to the power sector.

Some members of the ECC also expressed concern over repeated tariff increases, including Rs1.95 per unit base tariff hike last month, followed by about 93 paisa FCA, and suggested that the proposed recovery should be spread across the consumer categories to minimise its impact.

“After detailed discussion, the committee directed the secretaries of finance and power divisions to deliberate further [on the matter] and present an updated proposal before the next ECC [meeting],” an official statement said.

The ECC also constituted another committee, headed by Adviser to the Prime Minister on Institutional Reforms Dr Ishrat Hussain and comprising the PM’s assistant on energy, secretaries of finance, power and water resources and representatives from the Water and Power Development Authority, National Electric and Power Regulatory Authority and the AJK government, on the issue of Rs52bn subsidy allocation on payment of outstanding dues and settlement of tariff issues.

The Naya Pakistan Housing and Development Authority (NAPHDA) chairman presented the revised eligibility criteria for selection of applicants, modalities for payment of cost subsidy and mechanism for release of funds with reference to the special incentive package for the housing and construction sector, announced by the prime minister in July last year.

The ECC approved the stipulated eligibility criteria and payment mechanism for cost subsidy against 100,000 housing units to be constructed during phase-I by the end of the year. The committee urged the NAPHDA to facilitate access to housing finance at affordable rates for expanding housing ownership in accordance with the vision of the prime minister, enabling low-to-middle income groups to avail low-cost housing facility according to their affordability.

The ECC approved a summary of the NAPHDA seeking permission to enter into negotiated procurement agreements for construction of low-cost housing units through public-private partnership. The committee also approved NAPHDA’s summary about revision of key parameters of the Mark-up Subsidy Scheme for housing finance, as recommended by the State Bank of Pakistan, to ensure maximum participation for access to quality housing at an affordable price by fulfilling a relatively-relaxed eligibility criterion.

The Ministry of Industries and Production placed a summary before the ECC regarding waiver of Rs1bn late payment surcharge (LPS) for operations of SNGPL-based fertiliser plants between September 2018 and November 2019. The committee deferred the summary with a directive that LPS may be calculated on the actual cost incurred and a revised proposal be presented.

The ECC approved a summary of the Ministry of Energy (Power Division) regarding the government sovereign guarantee against financing facility of Rs15.25bn from local banks for evacuation of power from 2x660MW Thar coal-based projects of Sino-Sindh Resources and Sindh Engro Coal Limited.

The secretary of national food security and research updated the meeting on import of 300,000 tonnes of wheat through the Trading Corporation of Pakistan in compliance with the ECC’s earlier decision and reported that the TCP had accordingly opened the ninth international tender. The ECC approved the import 300,000 tonnes of wheat.

Published in Dawn, March 18th, 2021