ISLAMABAD - In a major development, the government on Monday decided to launch crackdown on electricity theft and sever all illegal power connections within three months.

The Economic Coordination Committee (ECC) of the Cabinet in the chair of Finance Minister Asad Umar has agreed to immediate action against power-sector defaulters including Ministries and government departments whether Federal or provincial.

It was decided that meters of those persons, Departments and Ministries or any private entity will be disconnected if they fail to pay their bills for consecutive three months. On the payment of their bills they will be provided prepaid meters.

Chairman ECC directed the Power Division to take strict legal action against those officials and individual who are involved in power theft and to not show any leniency on the issue.

The top economic decisions making body of the country was informed that average power sector losses are about 18.5 per cent instead of 16.3 per cent allowed by the consumers.

The ECC has agreed that habitual electricity defaulters should be immediately shifted to pre-paid meters and areas with high incidence of default should be included in such a scheme.

The ECC has also decided that the matter of circular debt will be presented before Prime Minister Imran Khan.

The amount of Circular debt is standing at Rs 596 billion with an increase of Rs 30 billion in the last month (i.e. July), another Rs 582 billion are parked with the Power Holding companies under the STFF arrangements. The total liability currently stands at Rs 1188 billion.

The Committee was briefed on the impact of Industrial Support Package, Azad Jammu Kashmir subsidised units, Balochistan agricultural tube-wells, FATA receivables, and the impact of existing time lag on tariff determination mechanism of NEPRA.

The ECC observed that the PML-N government had taken the decision to discontinue the provision of subsidised power supply to AJK in budget 2018 and the previous government had also decided to discontinue the industrial Support package.

The Committee decided to bring the facts to the attention of the Federal Cabinet.

On the presentation of the Special Audit Report on payment of Circular Debt of Rs 480 billion by the Department of Auditor General of Pakistan, the ECC directed to hold an Operational and Financial Audit of DISCOs. It was decided that the Auditor General of Pakistan will complete the Audit of 4 highest loss making Discos in one month’s time and the audit of the entire sector will be completed in two month’s time after the approval from Cabinet.

The ECC also considered the update on the issue of sale of K-Electric and issued directions to the Departments concerned to formulate their recommendations for CCOP.

The ECC also decided that to cope up with the issue of urea fertilizer shortage in the country, three urea manufacturing plants that are  presently in-operational will be supplied RLNG  for a period of four months starting from September with 50 per cent cost of RLNG being picked up by the government and the balance 50 per cent by the respective manufacturing units. These Plants will utilise their full potential and the decision to import fertiliser will be taken after taking into account their production capacity.

The ECC directed the Ministry of Industries and Production to figures/data about actual production  and consumption of the urea during 2017-18 and the estimates for 2018-19, in consultation with Ministry of National Food Security & Research and submit a report thereof to the ECC in its next meeting. In case of any shortfall in consumption of urea, the reasons may also be identified in the report.

It also asked for operationalisation of  three closed fertiliser plants i.e. Fatimafert, Agritech and Pakarab (in case of the latter only to the extent of urea production amounting to 8000 tons per month) on 100 per cent RLNG for urea production for four months (September - December 2018),  working out total subsidy impact on running of all three plants i.e. Fatimafert, Agritech and Pakarab on 100 per cent RLNG with 50 per cent of subsidy being borne by the Government while remaining 50 per cent being picked up by the respective fertilizer plants; and  working out the windfall gains reaped by the fertiliser industry, in light of the net Variable Contribution Magins, as a result of charging higher rates as well as exports during 2017-18 and 2018-19.

The windfall gains may be adjusted against the subsidy outstanding in favour of fertilizer industry, under the fertilizer subsidy schemes which were in vogue during the preceding 3 financial years.