ISLAMABAD: With two major fuel suppliers desperately in desperate need of $2 trillion of liquidity in three months, the government has cut electricity rates by an average of Rs 13 per unit in quick installments to secure an urgently needed bailout package. started to deliver. from the International Monetary Fund (IMF).
A source in a high position said. Serb Distribution companies (Discos) have already been instructed to withdraw from 8 June a subsidy of about Rs5 per unit introduced by former Prime Minister Imran Khan on 28 February.
This will also be part of this month’s consumer bill, which includes an additional fuel cost adjustment of Rs4 per unit.
This is followed by two equal divisions of Rs3.50 per unit. This applies to the July and August billing cycle followed by the remaining Rs1 per unit adjustment later. This will help address the IMF’s power sector conditions and revive programs that have been suspended since February of last year.
The Cabinet Economic Coordination Committee (ECC), convened on Monday, approved a rate rationalization plan for the electricity sector, following a decision the National Electric Power Regulatory Authority (Nepra) announced a few days ago on a base rate hike. 7.91 rupees per unit with an additional fiscal impact of 893 billion rupees in 2022-23.
A meeting chaired by Finance Minister Miftah Ismail called for the electricity department to “deliver 7.91 rupees to consumers from July 1.” Targeted Tariff Differential Subsidy (TDS) or cross-subsidy and tariff rationalization to consolidate into a single national tariff, as the government has to protect the first 200 units of consumers each month, was estimated at Rs 184 billion for disco. The electric power sector also requested K-Electric to apply the same rate to “maintain a uniform rate across the country”.
As an alternative, the Power Division has proposed a raise of Rs6.25 per unit from 1 July and Rs1.66 per unit from 1 October. However, this resulted in Discos’ TDS being Rs231bn. However, according to the requirements of the IMF program, the ECC decided to increase the tariff by 3.50 rupees per unit from July, then increase the tariff by 3.50 rupees further in August and 1 rupees on October 1. This also applies to KE. A top source said the plan would be immediately approved by the federal cabinet on Tuesday.
The official statement said in the electricity department’s summary of tariff rationalization that the ECC “approved an annual revitalization plan with certain modifications”. The ECC also directed the power department to recommend coordinating subsidy reforms for unprotected consumers that were approved in December 2021 but not implemented.
An informed source told the ECC that the two major fuel suppliers, Pakistan State Oil Ltd (PSO) and Pakistan LNG Ltd (PLL), were about to secure a supply of 12 fuels over the four months ending September 30. It said it was informed that it had a total liquidity requirement of Rs 970 billion. Transports LNG cargo per month and meets the furnace oil requirements of the power sector. This included a PSO of Rs1.7tr for both blast furnace oil and LNG and a PLL requirement of Rs278 billion for LNG to ensure a supply of around 800mmcfd for power generation Discos and 130mmcfd for K-Electric Ltd. Record-breaking oil and LNG have boosted liquidity requirements. Prices in international markets as a result of the Russian-Ukraine war and supply-demand constraints.
The meeting revealed that the average monthly shortfall from June to September was still Rs 52 billion, based on all other financial arrangements. However, the additional requirement for June was Rs 36 billion and is urgently needed, requiring Rs 174 billion in the first quarter of the next fiscal year.
The ECC has approved Rs 36 billion for the Petroleum Division to not only import petroleum products, but also to maintain the sustainability of the LNG supply chain. The amount allocated will be disclosed to Sui Northern Gas Pipelines Ltd (SNGPL) for pending claims relating to the cost of RLNG diverted to the domestic sector.
The ECC has also approved 18 additional grants totaling Rs 260.6 billion. This also included Rs 50 billion paid to Chinese coal power plants to purchase coal to meet the fuel requirements of sustained peak demand. However, the ECC has delayed another summary of the creation of a revolving fund for Chinese electricity producers committed under the China-Pakistan Economic Corridor, which has not been established and has accumulated Rs 340 billion in electricity purchase costs. .
The ECC has also approved additional subsidies for road and means advance payments to four states because of Khyber Pakhtunkhwa’s overspending of Rs 115 billion. The budget allocated to this account included 77 billion rupees for Punjab, 39 billion rupees for Sindh, 31.3 billion rupees for Khyber Pakhtunkhwa and 17 billion rupees for Balochistan.
The ECC has approved the extension of the Prime Minister’s Relief Package-2020 through June 30 for all five essential items, and the Ghee will be available for sale from June 9 at all Utility Stores Corporation (USC) stores nationwide for Rs300 per kilogram. allowed to do so. High market price of over Rs450 per kilogram. The ECC has approved an allocation of Rs 3.44 billion in funding to USC through additional grants.
The Department of Aviation outline for the payment of sales tax on rental aircraft on an installment basis has also been approved. It is reported that Pakistan International Airlines Corporation Ltd (PIACL) has acquired four A320 aircraft on a dry-lease basis over a 72-month period. Due to financial constraints, PIACL was unable to pay general sales tax on the total rental value in one lump sum. The ECC has approved the payment of sales tax of 17pc, or Rs15.9bn, on a total rental value of Rs9.38bn of the four aircraft in monthly installments over the term of the lease, after taking into account the upcoming financial constraints of Hajj and PIACL. Aircraft arrival date.
The Ministry of Communications has submitted a summary of the additional funding requirements for the construction of the Gilgit-Shandoor Road, N-140. About Rs 2 billion was allocated to the federal budget for the outgoing fiscal year, while the actual funding requirement to acquire the land and pay the certified debt was Rs 6 billion. ECC approved 4 billion rupees as additional funding.
The Oil Division has submitted a summary of the TAL block’s oil and gas production enhancements for a provisional allocation of gas prices. Considering the country’s gas shortage, ECC conditionally allowed M/s MOL to start production in the Tal block called Mamikhel South. TAL JV has received a 2012 policy price provisionally pending further government decision.
The ECC has also approved an additional Rs 25.61 billion in additional grants to the oil sector to pay differential price claims to oil marketing companies and refineries during the first two weeks of June and for additional requirements in the preceding two weeks.
Posted at Serb on June 14, 2022