| Welcome to Global Village Space

Thursday, February 15, 2024

Gov.t again postpones decision on payments to IPP, LNG subsidy

Finance Minister Shaukat Tareen agreed to have separate discussions with relevant members and constituted sub-committees on both issues to discuss them further before reaching a decision.

Incumbent Minister for Finance, Shaukat Tarin has deferred the decision on two much-talked-about items on the Economic Coordination Committee’s (EEC) agenda. This is his first meeting at the ECC since taking up the post a while ago.

According to the national news agency, Dawn, the minister has decided to constitute two smaller groups on payments to Independent Power Producers (IPPs) and subsidy on LNG supplies, to have focused discussions.

Reportedly, the new minister has reservations regarding the IPPs deal and how the issue has been handled, but the deal is finalized now.

Certain members of the committee were reportedly interested in the politics surrounding the IPPs, but they were ensured that a small dedicated meeting to discuss the group would take place before any decision on the IPPs is taken.

Read More: Prime Minister worried about high rates of electricity

The Power Division has sought Rs89.9 billion from the government as part of the first installment to pay the IPPs according to the deal. Moreover, a discussion on whether to give the gas subsidy to the export-based industry was due yesterday. Government has to pay back IPPs a total of Rs403 billion under the agreements between both parties.

It must be mentioned here that the Power Division only recently has requested the government to not grant the subsidy to the sector as the sector is already enjoying subsidy on electricity and gas supply.

On the other hand, the ECC meeting did approve a subsidy of Rs4.1 billion to settle the dues of SNGPL for the cheap provision of gas to the export sector in March last year.

According to the statement, ‘Power Division presented another summary before the Committee regarding the release of the first installment of payment to the Independent Power Producers (IPPs). The ECC constituted a sub-committee chaired by the Federal Minister for Finance, comprising Ministers and Secretaries from Energy, Petroleum and other concerned Ministries for further deliberations.”

It is worth noting that the ECC has postponed the matter thrice in the past as well under former Finance Minister Abdul Hafeez Sheikh twice, while once under Hammad Azhar, though latest was due to NAB inquiry.

According to Tribune, out of the Rs89.9 billion, Rs23.2 billion will go to Hubco power plant, Rs39.5 billion to Kapco plant, Rs6.7 billion to Rousch power plant, Rs1.8 billion to Fauji power plant, Rs6.5 billion to Pak Gen, Rs6.2 billion to Lalpir power plant, Rs2 billion to KEL and Rs719 million to SABP power, all being set up under the 1994 policy.

IPPs want the matter to succeed according to the agreement without any hurdles and believe that they should be given their dues at the earliest.

Read More: Government missed the deadline to pay IPPs, default notices to be sent

Regarding the RLNG subsidies, only the commerce ministry supports giving energy subsidies to the export sector at the input stage as the subsidies are not yielding any significant increase in the exports of the industry.