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Power sector sustains hit of Rs400 billion in four years

The power sector has sustained a hit of Rs400 billion which is not being refunded by the FBR for the last four years, as the revenue collecting authority collects 16 percent GST on the electricity billed amount knowing that the recovery of billed amount from the electricity consumers hovers in the range of 84 to 87 percent annually, a senior official at the Ministry of Water and Power said.

The power distribution companies pay approximately Rs120 billion as 16 percent GST to FBR on its average total annual electricity billing of approximately Rs750 billion. However, the FBR refunded Rs20 billion of Rs120 billion every year for the last four years, holding back Rs400 billion on one pretext or the other. The FBR functionaries say that power distribution companies did not pay the GST on subsidies and losses which is why they were justified to hold back the amount collected in the head of GST.

Distribution companies also pay 16 percent GST on the excessive billing which sometimes gets settled at reduced volume of billing. However, the collected GST on excessive billing is not paid back. Now the Ministry of Water and Power has moved the summary to the ECC that is to meet here today with Finance Minister Dr Hafeez A Sheikh in the chair, seeking permission for distribution companies to pay the 16 percent GST on the collected amount on electricity billing. Under the existing practice, the FBR is charging 16 percent GST on the total billed amount, not on the recovered amount of electricity bills.

Four years back, distribution companies were used to paying GST on recovered amounts of electricity bills but top mandarins started charging GST on the total billed amount to show its performance in terms of collecting the revenue.

Both the FBR and the Ministry of Water and Power were in litigation of Rs64 billion which the FBR owes to distribution companies in the head of GST, said the official.

The ECC is also going to take up the summary seeking the restoration of the subsidy on the agriculture tube wells in Balochistan. The Finance division is the mover of the summary and Ministry of Water and Power did not oppose it.

Officials said that the ECC was not the proper forum to take up this subject after the 18th amendment. However, the Punjab government has opposed the move of the centre to restore the subsidy without taking it into confidence. In the case of Balochistan, the provincial government’s share in subsidy stands at 60 percent whereas the centre’s share is 40 percent. In other federating units, provincial governments pick up the whole subsidy. The subsidy to agriculture tube wells was earlier suspended a year back. In Balochistan, the central government will extend Rs14 to 15 billion subsidies to tube wells if it is restored.

In Punjab, the Central Power Purchase Agency (CPPA) provides electricity to tube wells at subsidised rates and the Punjab government is supposed to pick the subsidy of 25 percent as in the past. However, the Punjab government seems annoyed over the summary that the Finance Division is going to place today in the ECC meeting.

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