The Senate Standing Committee on Finance was informed on Thursday that the government was forced to provide a subsidy of Rs 295.8 billion on account of power tariff differential due to the failure to implement 48 per cent increase in power tariff that was enhanced only 13 per cent during the current fiscal year.
The meeting of the committee was chaired by Senator Ahmad Ali of MOM and attended by Syeda Sughra Imam of PPP and Muhammad Talha Mahmood of JUI-F. Senators wanted to know why the power subsidy had ballooned from an estimated allocation of Rs 84 billion in the budget to revised estimate of Rs 295.8 billion for the current fiscal year.
Secretary Finance Dr. Waqar Masud Khan explained that the for retaining the subsidy at the allocated level the power tariff was to be increased by 48 percent while it was increased by only 13 percent during the current fiscal year.
Chairman Ahmad Ali sought explanation for other subsidies for the next fiscal year. Secretary Finance said that other than power, wheat, sugar, and fertilizer no other subsidies would be provided. Chairman asked what amount of subsidy was kept for the Pakistan Railways (PR) and Pakistan International Airlines (PIA). Secretary Finance said that an allocation of Rs25 billion was kept for PR while no subsidy was kept for PIA.
When asked by senators, the Finance Secretary conceded that the government would be picking up interest payment of Rs3.8 billion on behalf of a loan taken by the national carrier ten years ago. He said it was not subsidy but investment as it was being used to enhance government’s equity in the airline which had risen to 75 percent. He said it was shown in the investment details of the budget documents.
Chairman observed that the tax payers were being hurt but the government was not accepting that it was giving subsidy. He directed the Finance Ministry to submit complete details of all the subsidies shown under what head to the committee by Friday. While discussing the recommendations of Senators, the Chairman Federal Board of Revenue (FBR) Salman Siddique said that the tax exemptions to selected areas of Khyber Pakhtunkhwa would end as those were creating distortions in the tax system.
He said that a new SRO would be issued within a month’s time that would make binding payment of refunds within 30 days; otherwise FBR would be liable to pay interest for 31 days. He said the registered industrial units would get sales tax refund within 30 days on the import of capital goods, machinery, for their only use.
The committee approved the recommendation of FBR, that the corporate and regulatory bodies should submit their surplus funds to the Federal Consolidated Fund after payment of their tax dues. It is important to mention that SECP took FBR to court over the payment of taxes last year. FBR estimates revenue of Rs2 billion from the income of regulators during the current fiscal year.
The committee rejected a proposal on the duty rationalisation on vegetable ghee as Senator Ahmad Ali alleged it was personal agenda of Senator Ilyas Bilour, who is a ghee manufacturer. The committee was informed that the net hydel profit issue was resolved for the years 1991 to 2005. The Khyber Pakhtunkhwa was given Rs 35 billion during the current fiscal period, while an allocation of Rs 25 billion was made for next fiscal period. And the remaining amount of Rs 50 billion would be cleared in next two fiscal years. For the clearance of dues from 2005 onwards a committee was working for an amicable solution.
While discussing the highway projects, Senator Ahmad Ali observed that huge amounts of money was being spent on less utilised Rs44 billion Gwadar-Panjgur-Hoshab and Rato Dero Road which the Acting Chairman National Highway Authority (NHA) Muhammad Junaid said would facilitate the movement of NATO vehicles. So far an amount of Rs18.3 billion was released while an allocation of Rs1.7 billion was made for the next fiscal period.
Senator Ahmad Ali stressed upon taking measures for speeding up traffic between the main artery Lahore and Karachi, as the plans to speed up crossing of Kohat tunnel by a truck moving from Karachi within 20 hours was not implemented. He also demanded banning single axle trucks which hampered flow on traffic on national highways and were able to carry fewer loads. Sughra Imam said that the projects approved by the Planning Commission were slow moving and their costs were later on revised to double of the original cost.
