FCA exemption will cause Rs21bn impact: Miftah

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ISLAMABAD: The government will not charge FCA to electricity consumers using less than 200 units per month after giving confidence to the International Monetary Fund (IMF) and the World Bank (WB).

This was stated by Finance Minister Miftah Ismail during a press conference on Friday. He said the decision not to charge FCA would have a fiscal impact of Rs 20-21 billion and resources would be created in this regard.

The finance minister said Pakistan has bridged the $4 billion financing gap as highlighted by the IMF and the Fund’s Board meeting will approve on Monday the release of a $1.17 tranche. billion in Pakistan under the Expanded Financing Facility (EFF).

The minister said Pakistan has bridged the $4 billion financing gap – $3 billion from Qatar, $1 billion from Saudi Arabia due to oil on deferred payments, as reported by the media, and $1 billion investment from the United Arab Emirates.

On aid to consumers using less than 200 units, the Minister said that 56% of consumers would receive aid due to FCA, in addition to consumers of agricultural tube wells. He said a total of 17.1 million out of 30 million electricity consumers would not be charged for the fuel price adjustment. Wealthy and commercial consumers as well as the industrial sector, etc. would be charged FCA, he added.

Prime Minister Shehbaz announces waiver of fuel levy adjustment for electricity consumers of 17 million

The minister said those who use 200 units do not need to pay their old bills as the government would issue them new bills without FCA and those who have paid their bills will be reimbursed FCA in the month of September 2022.

The minister said electricity was made very expensive in the month of May 2022 as one day the demand peaked at 30,000 MW and the government had to operate expensive power stations to meet the demand on top of increasing electricity of Rs7 per unit as required by the IMF in July and August has led to higher electricity bills. The finance minister said that the IMF and the World Bank have taken part in protecting consumers using less than 200 units.

The Federal Minister said the Prime Minister had also formed a committee to review fuel adjustment charges imposed on consumers using 200 to 300 units and explore options to relieve them.

He said Qatar will invest $3 billion in Pakistan and the IMF board will meet between Monday and Tuesday evening after which the money will be released to Pakistan. The minister said the flooding caused extensive damage to both lives and infrastructure as well as crops. He added that 40-60 billion rupees of cattle were washed away by the floods, billions of rupees of houses were razed to the ground and crops were damaged. The minister feared that the floods would have a negative impact on GDP growth and that if the water did not recede, future crops would also be affected.

The Minister said that a notification had been issued for the postponement of the retail fixed tax and that he had reverted to the old system for the next three months. The Minister said that the Prime Minister held a meeting with potential donors and today held a meeting with Islamabad-based Ambassadors. He said the World Bank had reallocated $370 million to the floods and called on wealthy people in the country to contribute.

The Minister of Finance further stated that the Government of Qatar has expressed interest in investing $3 billion in (i) long-term leasing of Pakistani airports with management control; (ii) construction of terminals in seaports; (iii) purchase of LNG plants and; (iv) solar energy because the government wanted to produce 8,000 MW of cheaper solar electricity. PM ordered to hire international adviser for LNG power plants, he said if nothing happened Qatar would invest in Pakistan stock market

He said there was speculation that Pakistan wanted to sell the Roosevelt Hotel to Qatar and said no discussion had taken place on either the Roosevelt Hotel or Pakistan International Airlines.

The Ministry of Finance provided Rs 28 billion BISP to provide cash relief of Rs 25,000 to flood affected families and provided Rs 5 billion to NDMA.

Copyright Business Recorder, 2022

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