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Business Recorder
9 hours ago
- Business
- Business Recorder
Probe into power projects: Senate panel for action against PD for providing ‘misleading' info
ISLAMABAD: The Senate Standing Committee on Economic Affairs has recommended the Economic Affairs Division (EAD) taking action against the Power Division for allegedly providing misleading information during an inquiry initiated by the former caretaker Federal Minister for Energy. The inquiry pertains to the ACSR Bunting Conductor tender and the World Bank-funded 765kV Dasu-Islamabad Transmis-sion Line Project (Lot-1). According to official documents, Additional Secretary Power Division, Imtiaz Hussain Shah, informed the Committee on June 30, 2025, that the Ministry of Foreign Affairs had confirmed no Power of Attorney (PoA) related to Chinese firms M/s Henan Tong-DA Cable Co. Ltd. or M/s Jiangsu Zhongtian Technology Co. Ltd. was submitted to the Pakistani Embassy in Beijing for verification. The Embassy also clarified that since Pakistan joined the Apostille Convention in November 2024, such attestations are no longer required through diplomatic channels. HUBCO proposes $51mn investment in Thar-based coal projects The Committee, chaired by Senator Saif Ullah Abro, directed the EAD and Power Division to directly contact the companies involved to determine whether they had ever submitted such documents. In its session, the Committee was also briefed on the submission of records for a special audit into the ACSR Bunting Conductor case. These were handed over to the Auditor General's office on June 4, 2025. Regarding the high-voltage Dasu–Islamabad Transmis-sion Line (Lot-1), the Power Division shared that the internal inquiry led by GM NGC Muhammad Mustafa had recommended referring the matter to the World Bank. The Bank, in response, confirmed that the procurement process was conducted in line with its guidelines. However, the Committee expressed concern over a potential cover-up. Officials from the Power Division failed to present the supplementary report that supposedly formed the basis for communication with the World Bank. Instead, they showed only a letter written by a former senior official, which the Committee suspects was intended to conceal irregularities. The panel demanded all correspondence relating to that letter and clarified that under World Bank procurement regulations, the borrower (in this case, Pakistan) holds full responsibility for the procurement process. The Committee was told that no formal inquiry report was ever prepared or submitted by former caretaker Energy Minister Muhammad Ali, despite his active role as head of an internal investigation committee. Power Division officials stated they had only heard about an unsigned report, which was never officially shared. The Committee was visibly shocked and questioned how the former Minister was able to present conclusions at a Senate Standing Committee meeting on February 20, 2024, without a documented report. It directed the Power Division to locate and submit even an unsigned copy of the inquiry findings and recommended that EAD take disciplinary action against the Power Division for providing misleading information in this matter. The Committee further advised EAD to seek clarification on how both the former caretaker Minister and the then Secretary of the Power Division—members of the inquiry committee—could act with such negligence, allegedly concealing facts about financial and procedural irregularities in key power sector tenders. On the issue of recovering Rs 1.282 billion from a contractor involved in the 765kV Dasu–Islamabad Grid Station (Lot-IV), the Committee clarified that the NTDC Board was not authorized to conduct an independent inquiry. It recalled earlier discussions confirming that the disputed amount was not to be considered in the bid evaluation, per the bidding documents. The Committee instructed EAD to formally write to the Public Accounts Committee (PAC) to ensure recovery of the Rs 1.282 billion from the lowest bidder in line with earlier recommendations. Copyright Business Recorder, 2025
Business Recorder
a day ago
- Business
- Business Recorder
Discontinuation of ED collection opposed: KP govt urges Power Division to reconsider decision
ISLAMABAD: The federal government's plan to discontinue the collection of Electricity Duty (ED) has hit another roadblock as the Khyber Pakhtunkhwa (KP) government has formally opposed the move, following the earlier objection by the Sindh government. The KP government has urged the Power Division to reconsider the decision in the interest of constitutional propriety, cooperative federalism, and fiscal stability. In response to a letter dated June 30, 2025, from Federal Minister for Power Sardar Awais Khan Leghari, KP Chief Minister Ali Amin Gandapur conveyed strong reservations regarding the unilateral discontinuation of ED collection by the Power Division through Distribution Companies (Discos), without prior notice or consultation. Leghari urges chief ministers to scrap electricity duty from bills starting July Gandapur highlighted the constitutional and legal basis for the imposition of Electricity Duty: (i) under Article 157(2)(b) of the Constitution of Pakistan (1973), provincial governments are empowered to levy taxes on electricity consumption within their jurisdictions ;(ii) according to Section 13(2) of the KP Finance Act, 1964, every distribution licensee is obligated to collect and remit Electricity Duty to the provincial government. This duty constitutes a first charge on the amount recoverable for energy supplied, thereby making it a debt owed to the KP government; and (iii) Rule 5(1) of the West Pakistan Electricity Duty Rules, 1964 requires Discos to list Electricity Duty as a separate item on electricity bills and recover it alongside energy charges. He further argued that under Section 38 of the NEPRA Act (1997), provinces are authorized to monitor Discos' compliance regarding billing, metering, and theft cases. The Act also affirms the provincial government's jurisdiction over electricity consumption charges based on the principle of subsidiarity. Gandapur pointed out that under Section 36(2) of the State-Owned Enterprises (SoE) Act, 2023, all previous orders, regulations, and instruments remain in force unless repealed. Thus, the KP Finance Act, 1964 and the Electricity Duty Rules, 1964 continue to hold legal standing. He also referenced Articles 268 and 279 of the Constitution, which provide continuity to existing laws, including taxation statutes, until altered by the appropriate legislature. These protections, he argued, reinforce the provinces' legal right to collect ED. The chief minister emphasized that under Article 154(1) of the Constitution, the Council of Common Interests (CCI) is the designated body to formulate and regulate policies related to electricity and oversee related institutions. Therefore, any decision affecting the power sector must be considered and approved by the CCI, with mandatory consultation from the provinces—a process that was not followed in this case. He noted that three distribution companies—PESCO, HAZECO, and TESCO—operate within KP's jurisdiction and are legally bound to comply with provincial laws, under the principle of lex situs (the law of the place where the property is situated). The ED, he added, must be collected through the billing system as mandated by law, and there exists no alternate mechanism for its recovery. 'The Power Division's unilateral administrative decision, without CCI's approval or consultation with the KP government, is unconstitutional and legally void,' Gandapur asserted. 'This measure may unnecessarily fuel federal-provincial tensions.' The KP government maintains that ED is not a general tax that can be collected through alternative channels, but rather a sector-specific charge that, by law, must be recovered via electricity bills issued by Discos. The provincial government has sought immediate reconsideration of the decision of Power Division, expressing readiness for constructive dialogue, provided the constitutional and legal frameworks are upheld. Earlier, Sindh Chief Minister Murad Ali Shah also criticized the federal government, accusing Islamabad of imposing a unilateral decision and advising it to 'put its own house in order' before dictating terms to the provinces. Currently, Discos collect an estimated Rs 60 billion annually as Electricity Duty on behalf of the provinces. While the federal government claims the move is intended to provide relief to consumers, provincial governments argue it undermines their constitutional right. Power Minister Sardar Awais Leghari has stated that he will present the collective responses of all provinces to the prime minister before deciding on a future course of action. Copyright Business Recorder, 2025
Express Tribune
3 days ago
- Business
- Express Tribune
Govt poised to do away with cross-subsidies for gas
Listen to article The government is set to end cross-subsidy for domestic gas consumers and introduce a direct budgeted subsidy model by 2026, in line with the mechanism established for the Power Division. The federal government is locked in negotiations with the International Monetary Fund (IMF) under the Resilience and Sustainability Facility to replace cross-subsidies with direct subsidies commensurate with the consumer income levels under the Benazir Income Support Programme. In a recent meeting, the Petroleum Division informed the cabinet that they were engaged with the IMF and the new system was likely to be developed by 2026. It said that it had already hired advisory firm KPMG and a dedicated group had been formed to examine the replacement of cross-subsidies as part of efforts to revitalise the gas sector. It was revealed that residential consumers were benefitting from a cross-subsidy of over Rs150 billion, financed by imposing higher tariffs on captive power plants, industrial and commercial consumers. The Petroleum Division added that, as part of reforms agreed with the IMF, a levy had been imposed on the captive power plants. As a result, gas prices for them have increased, consumption has declined and the ability to cross-subsidise residential consumers has gone down. It was highlighted while discussing a court case in Balochistan relating to Sui Southern Gas Company (SSGC). SSGC receives around 111 million cubic feet per day (mmcfd) of gas from Balochistan fields (Sui and Zarghon), which is insufficient to meet winter demand from domestic consumers in the province, which peaks at 210 mmcfd. To make up for the deficit, SSGC diverts gas from its sources in Sindh, which in turn faces low pressure and load management in winter. SSGC claims that more than 26 billion cubic feet (bcf) – 59% of the total of 44 bcf supplied to Balochistan — was either stolen or illegally consumed by tampering with gas meters. The Petroleum Division said that, as reported, while SSGC's operations in Sindh recorded unaccounted-for-gas (UFG) losses of 9.5% during financial year 2022-23, the losses in Balochistan stood at a staggering 59.7%. The loss resulting from low or no recoveries in Balochistan was estimated at Rs22 billion. Despite persistently high UFG losses, SSGC continued to operate and invest in the area to support the government's socioeconomic development agenda and to comply with orders issued from time to time by the Balochistan High Court regarding maintenance of adequate supply pressure during winters. The Balochistan High Court restrained SSGC in May 2023 from charging more than Rs5,700 in monthly gas bills. It also constituted a commission for making recommendations on gas tariffs to be charged in the colder areas of Balochistan. The commission made the following domestic tariff recommendations: for summer, 200 cubic metres at Rs250 per million British thermal units (mmBtu), totaling Rs2,551 per month; and for winter, 590 cubic metres at Rs500 per mmBtu, totaling Rs8,848 per month. Over five months, the maximum amount payable would be Rs62,092. Consumption above 590 cubic metres would attract the non-protected category tariff of Rs5,174 per month. The Petroleum Division shared that the Balochistan High Court, through its order dated June 13, 2024, directed SSGC to implement the commission's recommendations with retrospective effect from November 2023, resulting in revenue losses. In accordance with the notified tariff effective from February 1, 2025 under Section 8(3) of the Ogra Ordinance, 2002, monthly charges for two slabs were worked out as under: For consumption up to 200 cubic meters, the notified rate is Rs4,200 per mmBtu, totaling Rs15,827, plus Rs2,000 in fixed charges, taking the total monthly bill to Rs17,827. For consumption above 400 cubic meters, the gas charges are Rs106,441 plus Rs2,000 in fixed charges, totalling Rs108,441. The Petroleum Division argued that the tariff structure recommended by the commission conflicted with the government's approved tariff, causing revenue losses. It was further outlined that the Balochistan High Court's order was challenged by SSGC in the Supreme Court. The apex court, through its order dated October 24, 2024, directed the Oil and Gas Regulatory Authority (Ogra) to thoroughly review the commission's report and finalise recommendations through hearings and consultations with all relevant parties. The cabinet was informed that Ogra held a hearing on November 11, 2024 and issued its findings on November 22. In its report, Ogra emphasised that commission members could not cite any statutory provision for recommending a special tariff for Balochistan consumers.
Business Recorder
3 days ago
- Business
- Business Recorder
Rs50bn extra subsidies to power consumers: Planning ministry defies ECC decision
ISLAMABAD: The Ministry of Planning, Development and Special Initiatives has reportedly declined to comply with the Economic Coordination Committee's decision to allocate Rs50 billion in additional subsidies to power consumers over a three-month period, well-informed sources told Business Recorder. According to sources, the Planning Ministry has referred to a letter from the Finance Division dated May 16, 2025, and an Office Memorandum (OM) from the Power Division dated June 5, 2025, regarding the ECC's May 5, 2025 decision on 'tariff rationalization for the power sector – waiver of rebasing for up to 200 units.' The Planning Ministry argues that, under the Public Finance Management (PFM) Act 2019, funds under the Public Sector Development Program (PSDP) are to be allocated and released solely for duly approved development projects. The Ministry pointed out that the Federal Cabinet had approved the Rs50 billion reallocation from the PSDP during its meeting on July 8, 2024, based on a summary from the Power Division. However, the Finance Division subsequently revised the PSDP 2024–25 allocation downward—from Rs1,400 billion to Rs1,100 billion—via an Office Memorandum issued on July 26, 2024. As a result, ministries and divisions collectively surrendered Rs300 billion to absorb the reduction. Ministry seeks Rs1.6trn PSDP: FY26 budget on June 2 The Planning Ministry has stated that, in light of this overall reduction, it cannot surrender an additional Rs50 billion at this stage. However, it has no objection if the Finance Division reallocates the required funds from the Rs300 billion already surrendered by other ministries under PSDP 2024–25. It has advised the Power Division to approach the Finance Division accordingly. Official documents reveal that the ECC, on May 5, 2025, had directed the Planning Ministry to surrender Rs50 billion from the PSDP to the Power Division as part of the government's commitment to meet circular debt (CD) targets agreed with the International Monetary Fund (IMF). The Power Division had earlier informed the ECC that the Prime Minister's Office, on May 13, 2024, instructed it to finalize a plan for off-grid energy solutions, including the solarization of tube wells in Balochistan, for the FY 2024–25 budget. Subsequently, consultative meetings were held under the chairmanship of the Minister for Power and the Chief Minister of Balochistan. The sessions were attended by the Ministers for Commerce and State for Power, provincial ministers, secretaries, and energy experts. The recommendations from these meetings were presented to the Prime Minister on February 2, 2024. It was agreed to solarize approximately 27,000 agricultural tube wells, each eligible for compensation of up to Rs2 million, contingent upon disconnection from the national grid. The cost—estimated at Rs55 billion—would be shared between the federal government (70%) and the Balochistan government (30%). A detailed agreement, including implementation mechanisms via Standard Operating Procedures and a Steering Committee, was signed on July 8, 2024, by the Power Division Secretary and the Chief Secretary of Balochistan. The Cabinet gave formal approval on July 31, 2024. So far, Rs14 billion has been released via a Technical Supplementary Grant (TSG) from the National Food Security and Research Division's budget under the Prime Minister's National Programme for Solarization of Agricultural Tube Wells. The Power Division informed the ECC that the remaining Rs24.5 billion would need to be provided from the Rs50 billion additional subsidy allocation proposed by the Finance Division. It emphasized that, in order to meet the revised CD flow target of Rs337 billion by June 2025, it must utilize the entire Rs1.229 trillion subsidy allocated for the power sector. The Cabinet's July 8, 2024, approval to reallocate Rs50 billion from the PSDP to fund tariff differential subsidies is part of this subsidy allocation. While the Power Division agreed to allocate funds from its existing budget in the short term, it requested that any shortfall be reimbursed in June 2025 to meet IMF-agreed CD targets. To address the issue, the Power Division submitted two proposals: (i) Finance Division should surrender Rs50 billion from PSDP to the power subsidy lump provision in Demand No. 45, as per the Cabinet's July 8, 2024 approval; and (ii) a Technical Supplementary Grant of Rs24.5 billion should be transferred from Demand No. 45 of the Finance Division to Demand No. 33 of the Power Division, for the implementation of the solarization project in Balochistan. Copyright Business Recorder, 2025
Business Recorder
3 days ago
- Business
- Business Recorder
Power wheeling policy for export industry: MoC seeks update from PD ahead of NEDB meeting
ISLAMABAD: The Ministry of Commerce has sought an update from the Power Division on the long-awaited electricity wheeling policy for the export industry, ahead of the National Export Development Board (NEDB) meeting scheduled for Thursday (July 17), to be chaired by Prime Minister Shehbaz Sharif. On July 22, 2024, during a previous NEDB session, the Prime Minister had directed that the wheeling policy for the export sector be finalized without further delay. According to the Commerce Ministry, the upcoming 4th NEDB meeting on July 17, 2025, will include a review of the updated status of the wheeling policy, with a particular focus on recommendations from the technical committee headed by the Special Assistant to the Prime Minister. These include proposals for viable wheeling charges. Accelerating Pakistan's livestock exports in global halal markets Sources said the success of the Competitive Trading Bilateral Contracts Market (CTBCM) hinges on two critical factors: the volume of available capacity and the level of wheeling charges. Wheeling charges are now expected to be reduced to Rs12/kWh, down from the earlier proposed Rs26/kWh. The All Pakistan Textile Mills Association (APTMA) has strongly advocated for electricity availability through business-to-business (B2B) contracts at wheeling charges between 1 to 1.4 cents/kWh, excluding cross-subsidies and stranded costs. APTMA argues that in the current economic climate, boosting exports must be a top national priority. The industry warns that uncompetitive power tariffs and emerging green energy regulations in export markets are serious threats to Pakistan's textile and apparel exports. A competitive wheeling mechanism under CTBCM is considered essential for the industry's recovery and long-term sustainability. The association has criticized the Central Power Purchasing Agency-Guarantee (CPPA-G) and distribution companies (Discos) for proposing an 'absurd' wheeling charge of 9.6 cents/kWh, saying it defeats the purpose of CTBCM and market liberalization. APTMA notes this rate is even higher than the full electricity tariffs for export sectors in competing countries such as: (i) Bangladesh: 8.6 cents/kWh; (ii) India: 6 cents/kWh; and (iii) Vietnam: 7.2 cents/kWh APTMA has also raised concerns about Rule 5 of the Eligibility Criteria (Electric Power Supplier Licence) Rules, 2023, which it claims undermines NEPRA's authority to independently determine fair wheeling charges. The rule reportedly allows the Power Division to dictate both the structure and amount of wheeling charges. Reiterating its long-standing demand, APTMA has called for a regionally competitive power tariff of 9 cents/kWh, citing both regional benchmarks (5–9 cents/kWh) and domestic cost-of-service studies, which show that tariffs for 83–84% of Pakistani consumers are already around that level. NEPRA's recent determination supports this demand, with industrial base rates for July 2025 set at: (i) Rs21.65/kWh (off-peak); and (ii) Rs30.76/kWh (peak). These rates roughly translate to 9.5 cents/kWh before the application of cross-subsidies. On renewable energy wheeling, APTMA claims that the current wheeling rate of 4.5 cents/kWh makes CTBCM implementation economically unviable. It notes that even for a textile unit operating three shifts a day, only about 20% of energy needs can be met through wheeling at a viable cost (~8 cents/kWh). Copyright Business Recorder, 2025
