AHMAD AHMADANI
Country might once again face hours’ long electricity load-shedding and a crisis of petroleum products in near future if Rs 284 billion were not released to clear pending subsidy dues and GST (general sales tax) refunds, Pakistan Today learnt on Saturday.
Well-placed sources disclosed to this scribe that the Ministry of Water and Power has written a letter to Prime Minister Nawaz Sharif about unsustainable financial condition of the power sector due to subsidy non-payment and non-settlement of GST refunds. They said the ministry sought clearance of billion of rupees worth subsidy dues and refunds of GST to avoid looming electricity and oil crisis. The Finance Ministry has so far not paid subsidy of Rs 175 billion and even not cleared Rs 108 billion worth GST refund claims.
The sources said that Power Ministry has warned the government to clear all the pending dues immediately to avoid alarming oil and energy crisis. And, if the government does not resolve present financial crisis of power sector then notice of sovereign default by IPPs (independent power producers) and reduced generation due to drying up of their credit lines while PSO default in furnace oil and LNG payments to their supplies and reduced supplies to the power plants would damage the credibility of the country. Also, reduced generation would lead to non-observance of the load-shedding plan, they added.
“The premier has been asked to issue instructions to Finance Ministry to clear all subsidy dues in next 15 days after making due budgetary provision through supplementary grant and rationalize future subsidy budgeting after taking into consideration the policy decision by the government for various categories of consumers, which may either be reduced as per budgetary provisions or the budgetary provisions increased to match the announced subsidies, sources said, adding, “This may kindly be treated as the most urgent.”
The sources informed that the power sector subsidies have accumulated to Rs 174 billion due to deficient budgeting of the subsidies, resulting in non-payment to IPPs (independent power producers) in this financial year along with increase in the payable of Pakistan State Oil. They said the power sector cross subsidies around Rs 30 – 40 billion over various consumer category during tariff settings and collects another Rs 60 – 65 billion in Tariff Rationalization Surcharge (TRS).
“The burden of Rs 283.17 billion (Rs 174.97 billion of outstanding subsidies and Rs 108.2 billion of GST refunds) is becoming an unbearable cash flow constraint, which is bound to lead to full fledge crisis, if not resolved on priority,” officials said.
The sources said that it was earlier decided that the matter of GST refunds would also be settled and seizure of DISCOs (power distributing companies) account would not be resorted to by FBR. “While unsettled GST continues drain of billions rupees every month on false claims by FBR (federal board of revenue) officials just to meet their revenue collection targets, they added.
It is important to mention here that ministry of water and power has sought emergency help in the wake of ongoing financial crisis of the power sector of the country. The crisis erupted because of the unfair measures of finance divisions regarding billion rupees worth subsidy non-payment and non-settlement of GST refunds. And, if said amount is not released within next 15 days then country might once again face shortage of petroleum, oil and lubricants (POL) products as happened in January 2015 and 12 to 16 hours long power cuts amid cold weather would make the life miserable.