In an unprecedented move, the centre has rejected the Ministry of Finance’s stance that said the government has no power to waive off an outstanding amount against any government entity by agreeing to Ministry of Water and Power’s argument that the reconciling of bills was a normal practice.
After accepting the Ministry of Water and Power and Government of Sindh’s (GoS) argument, the government acceded that the power distribution companies of Hyderabad and Sukkur regions, HESCO and SEPCO, were involved in massive over billing and directed both companies to book Rs 50 billion as losses in their financial statements instead of showing them as outstanding dues.
An official source said that the Economic Coordination Committee on the cabinet (ECC) on November 25 rejected the stance of the Ministry of Finance which was based on the argument that the committee had no power to resolve the issue.
The argument was that the rationale for the settlement was not clearly spelled out; neither any rule nor policy, which allowed writing off Rs 50.1 billion out of arrears of Rs 77.5 billion of the due amount.
However, Ministry of Water and Power contested the argument and said that the Council of Common Interests (CCI) had allowed at source deduction of electricity charges of the provincial government departments at 25 percent of the amount of bill subject to reconciliation of the electricity bills between DISCOs and government of Sindh.
The ministry said that even the federal adjuster returned at source claims due to lack of reconciliation of the electricity bills between DISCOs and Sindh government. It was further clarified that the proposed practice was not a new one and the practice of reconciling the bills was carried out in all provinces on regular basis.
The committee was informed that to settle issue of outstanding billing recovery; several meetings took place between Sindh government, HESCO and SEPCO. The results of joint verification by DISCOs and GoS of the load billing from a sample check of 3199 connection were also discussed. It was noted that only 60 percent billing out of the total billing for the period of July 2010 to January 2016 could be verified.
Accordingly, it was decided that sample results would be applied on all load and billing and 60 percent overall would be considered verified whereas 40 percent would be treated as non-verified and adjusted accordingly. Under this settlement, the GoS had to make payment of Rs 27.4 billion which would be treated as full and final settlement of the outstanding bills for last six year period.