Inside Financial Markets

ECC approves three surcharges on power tariff

eccECC approves three surcharges on power tariff

ISLAMABAD: The government on Saturday succeeded in getting approval of the federal cabinet’s Economic Coordination Committee to make three surcharges part of the power tariff, and charge power consumers for technical losses of the electricity distributing companies (DISCOs).

ECC in its meeting chaired by Finance Minister Ishaq Dar on Saturday gave its approval to the policy guidelines which were sought by the Ministry of Water and Power. Under the policy guidelines, these three surcharges amounting to 60paisa per unit, 30paisa/unit and Rs 1.50 per unit, and they will now be the part of the power price for the first time in the history of the country. The government has already been collecting these from the consumers in monthly power bills and has now succeeded in getting the nod of the ECC to get it included in the power price, sources in power sector told Daily Times on Saturday.

They said that the government was all set to charge consumers for technical losses of the power consumers to avoid litigation. Last year then National Electric Power Regulatory Authority (NEPRA) had fixed average losses of the DISCOs at 13 percent, and with effect to this decision of the regulator a burden of around Rs 25 billion to Rs 30 billion was reduced to the power consumers. Then ministries of finance and power were annoyed with NEPRA over its decision to fix the average technical losses. NEPRA even declined to increase the average of losses despite a request from the Water And Power Ministry, seeking review on the decision of NEPRA.

However, after the approval of ECC, NEPRA will conduct study of the losses of the DISCOs and it will pass on the burden to the consumers as per findings of its study, they added. According to the Finance Ministry, the ECC considered and approved the proposal put forward by the Ministry of Water and Power for “utilisation of the existing available generation capacity-policy for short term independent power producers” after it was made clear before the forum that the proposed policy does not contravene the Supreme Court of Pakistan judgement of March 30, 2012 in RPPs case. The ECC allowed the exemption of customs duty at the rate of 5% for the next 3 years.

During the course of this meeting, Ministry of Water and Power made it clear that the new arrangement is based on the “take and pay” arrangement and it will create no obligation on the government for payment of capacity (or any other) charges. In the light of CCOE (Cabinet Committee on Energy) consideration, ECC also gave approval, in principle, to the North-South gas pipeline project under G-to-G arrangement. The project is capable of transporting 1-2 BCFD of gas from Karachi to mid-country. The pipeline will not only help transport imported RLNG but also give transport capabilities for the Iran-Pakistan and TAPI gas pipeline projects which are expected to come on line in the next 3-5 years.

It was also decided that Inter-State Gas System (Pvt) Ltd be designated as the executing agency to implement the project under government-to-government arrangement in liaison with Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL). On another proposal moved by the Ministry of Water and Power, the ECC approved the issuance of sovereign guarantee by Ministry of Finance in respect of syndicated term finance facility amounting to Rs 25 billion for the power sector. The above loan has been arranged on behalf of power distribution companies by power holding (Pvt) limited through syndicated term finance facility from consortium of local commercial banks. The tenure of the facility is five years with two years grace period. The repayment of the loan shall be the responsibility of the respective distribution company.


Keeping in view natural gas demand and supply deficit on the supply network, Petroleum and Natural Resources proposed the allocation of gas from Ayesha gas field to SSGC, which is the nearest transmission network. The proposal was approved by the ECC. On the submission of the Federal Board of Revenue, ECC approved levy of regulatory duty of 15% on steel products ie billets, bars and wire rods, 5% on cold rolled coils and galvanized platted sheets, and Rs. 200 per set on mobile phones

Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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