| GEO Business|
| ECC approves relief to KESC|
| Updated at: 2225 PST, Tuesday, July 28, 2009|
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet was informed on Tuesday that the stock of wheat as on July 15, 2009 amounted to 9.810 million tons as against 3.764million tons in the same period last year, thereby showing a higher stock of about 6.046 million tones compared with last year.
The Economic Coordination Committee (ECC) of the Cabinet met under the chairmanship of Syed Naveed Qamar, Federal Minister for Privatization here at the Prime Minister's Secretariat here today.
The ECC approved deferment of 6% withholding tax on advance payment to all Rental Power Projects till monthly rental payment starts after commissioning of the project so that proportional withholding tax shall be deducted from monthly payments, over the term of the Rental Service Contract.
It also approved the proposal, moved by the Ministry of Commerce, that the decision for inspection of rice by the committee constituted by Ministry of Food and Agriculture be rescinded and allowed the Trading Corporation of Pakistan (TCP) to get the balance of contracted quantities inspected from international surveyors on its panel.
The decision was taken to avoid inordinate delay in carrying out quality inspection which was creating hardships for the supplier and embarrassment for TCP.
While discussing the issue of acquisition of bank loan facility for conversion of Shahbaz (Jacobabad) Forward Operating Base (FOB) into the Main Operating Base (MOB), the ECC granted ex-post facto approval of GoP Guarantee and Term Finance Agreement forRs.1 billion loan obtained from ABL.
In this regard the meeting also approved GoP guarantee for additional loan of Rs.6 billion and Term Finance Agreement as already agreed by the Finance Division.
The ECC also gave approval to the proposal by Ministry of Water and Power that the government guarantee amounting to Rs.3000million regarding KESC's financial improvement plan would be extended for a period of one year i.e. up to October 3, 2009, at the markup rate of 6 months KIBOR + 100 bps instead of 6 months KIBOR +2% p.a.
As per recommendation by the Ministry of Water and Power, the ECC also gave approval to the following amendments in the "Guidelines for Determination of Tariff for IPPs":
The existing procedures/stages for tariff determination by NEPRA provide transparency and a built-in mechanism for scrutiny of the costs of hydropower projects at feasibility study, EPC and COD stages and are adequate.
For projects under 1995 Policy (i.e. New Bong and Rajdhani Hydropower Projects), the period for IRR calculation may be allowed from 2004 (i.e. when the PPA's were initiated/signed between the companies and the NTDC).
For all other hydropower projects, a 30 months period prior to construction starts, may be allowed for IRR calculation subject to provision of related audited accounts.
The ECC agreed with the following interpretation of its earlier decision on fixation of consumer sale prices of CNG by OGRA:-
All cost parameters including rate of return, as agreed through MoU dated 25.8.2008, signed between GOP and All CNG Associations, will be taken as benchmarks for fixation of the CNG consumer prices.
Cost of gas/electricity (compression cost) will be adjusted at actual and the escalable cost components be indexed with CPI.
The ECC also noticed that the trade deficit improved by 18.52%to $ 17.04 billion in July-June 2009 from US $ 20.91 billion in the same period last year. Similarly, overseas Pakistani workersí remittances amounted to $7,811.4 million in July-June 2009-09 as against US $ 6451.2 million, showing an increase of 21.1 percent over the same period last year. Foreign exchange reserves stood at US $ 11.7 billion as on July 24, 2009 - up from US $.6.4 billion on November 2008.