ECC approves payment of the first installment to IPPs

The Economic Coordination Committee (ECC) of the Cabinet on Wednesday approved payment of Rs90 billion to 35 independent power producers (IPPs) in addition to  giving K-Electric (KE) a last chance to settle Rs212bn payments and ink an agreement for additional power intake from the national grid on timely payments.

The ECC meeting, presided over by Minister for Finance and Revenue Shaukat Tarin, also approved lowering taxes on Chinese investors of hydropower projects in Azad Jammu & Kashmir (AJK), exempting the import of oxygen and related equipment from duties and taxes besides an additional Rs27.5bn grant for disaster management schemes in Karachi.

Secretary Power gave a detailed briefing to the ECC regarding arrangement for providing additional power from the National Transmission & Despatch Company (NTDC) to KE since April 2020. He also raised the issue of non-payment for the additional power supply by KE to the Power Division.

Informed sources said the meeting was told that Rs212bn were payable by KE to the NTDC which operates the national grid. The Cabinet Committee on Energy (CCoE) had decided last year to provide 1,350-1,400MW additional power supply from the national grid to KE in a bid to address the citizens suffering amid prolonged power outages in Karachi.

A few ministers objected that the citizens of Karachi would suffer for such a move for no crime of their own and that was an element that KE management had been exploiting through political means.

The ECC also took up a summary regarding the release of first installment of 40 per cent payment to IPPs against total Rs403bn payables. The ECC approved payment of first installment to 35 IPPs out of total 47 and decided to withhold payment to the remaining 12 IPPs, under the Power Policy 2002, owing to the National Accountability Bureau investigation.

Tariff of power production will witness a decline after payment of dues to the IPPs which in result will save above Rs60 billion annually to the country.

The ECC considered and approved the summary to facilitate swift processing of such projects due to its strategic importance by reducing withholding tax from 2.1pc to 1.4pc (tax discounts) on payments to Chinese (Offshore) supply contractors. China Three Gorges Corporation as main sponsor is developing the 1,124 MW Kohala Hydropower Project (KHCL) located on river Jhelum in AJK while China Gezhouba Group Company Limited as main sponsor developing 700MW Azad Pattan Hydropower Projects.

The Ministry of Commerce presented a summary regarding implementation of United Nations Security Council Resolutions (UNSCRS) through export Policy Order, 2020 and Import Policy Order, 2020. The ECC considered and approved the summary.

The ECC also approved a summary of the Power Division regarding retargeting of power sector subsidies for electricity consumers during Phase-I in consultation with Ehsaas and Finance Division.

The ECC also approved a summary of the Ministry of Industries for exemption from duties and taxes for import of oxygen gas, oxygen gas cylinder and cryogenic tanks by oxygen concentrators, generators, manufacturing plants under respective Harmonised System (HS) codes for a period of 180 days to cope with the increased requirement of oxygen during the third wave of Covid-19 in the country.

The ECC also approved a total of 14 supplementary grants worth Rs44.28bn including Rs1.8bn to National Disaster Management Authority (NDMA) for procurement of oxygen gas and delivery mechanism for import of 6,000 tonnes of oxygen to meet the emergency requirement for supply of oxygen to hospitals for treatment of Covid-19 patients.

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