ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet approved a one-year extension of the Rs50 billion guarantee for LNG imports and the release of Rs38.5 billion for the federal cost of 27,000 tube wells in Balochistan on Monday.
The ECC meeting, presided over by Finance Minister Muhammad Aurangzeb, also approved Rs3.119bn for nine supplementary grants to various ministries.
The meeting approved a request of the Petroleum Division for an extension in the validity period of sovereign guarantees issued against the running finance facility of Rs50bn obtained from banks for LNG payments by the Sui Northern Gas Pipelines Ltd (SNGPL). The extension in guarantee would be valid until June 2026 based on improved cash flows of the company.
The committee also approved the disbursement of Rs24.5bn of federal share for solaraisation of 27,000 agricultural tube wells in Balochistan with a total estimated cost of Rs55bn. As decided by the prime minister in July 2024, 70pc (Rs38.5bn) of the conversion cost of these tube wells from grid power to solar systems would be provided by the federal government and the remaining Rs30pc (Rs16.5bn) to be financed by the Balochistan government.
Approves Rs24.5bn for Balochistan tube well solarisation project
The centre had already released Rs14bn. While approving the disbursement of its remaining share of Rs24.5bn for completion of the project, the ECC instructed the Power Division to monitor the implementation of key components of the project closely, particularly the disconnection of tube wells from the grid and removal of transformers and fixtures for every batch of feeders, as agreed under the project. The ECC also directed the Power Division to report back the progress on this account to the ECC in July.
The meeting also approved a total of nine supplementary grants worth Rs3.119bn. These included a Rs1.269bn surrender from defunct PWD to Ministry of Finance, Rs300m to Cabinet Division to operationalise new regulatory bodies, Rs250m for upgradation of Sadiq Public School Bahawalpur, Rs109m for purchase of contingent equipment by Civil Armed Forces on the deployment of Formed Police Unit for peacekeeping under the United Nations Peacekeeping Missions, Rs500m for Frontier Corps (KP) North, Rs25.9m for maintenance of Cessna aircraft, Rs556.8m for functionalising 36 benches of appellate tribunal of Inland Revenue across Pakistan, Rs106m for the National Energy Efficiency and Conservation Authority to replace 88m inefficient fans to save up to 5,000MW of peak electricity demand and Rs2.32m for Frontier Constabulary’s training centre at Michni, near Peshawar.
Challenges to oil refineries
Meanwhile, the chief executive officers (CEOs) of the country’s oil refineries held a meeting with the finance minister on their challenges in the upgradation of their facilities and taxation issues. The delegation highlighted that these upgrades, once implemented, have the potential to save the country close to $1bn annually in foreign exchange by reducing reliance on imported refined fuels.
The refinery representatives also raised concerns regarding the change in the sales tax regime on petroleum products, specifically the shift from zero-rated to exempt supplies. They explained that this change has led to a significant increase in operational and capital expenditure for the refining sector, adversely impacting the financial viability of their planned upgrades.
The minister assured the CEOs that the government would carefully review their concerns, especially those relating to the sales tax exemptions, and added that the issue would be addressed to support the continued growth and modernisation of the domestic refining industry.
Published in Dawn, May 6th, 2025
