ISLAMABAD - The Economic Coordination Committee (ECC) of the Cabinet on Wednesday approved the proposal of Ministry of Water and Power to extend the closing date of collection of Neelum Jhelum Surcharge at Re0.10/kWh up to June 30, 2018, for the Neelum Jhelum Hydropower Project.

The ECC meeting was chaired by Finance Minister Senator Ishaq Dar at the Prime Minister’s Office. The previous closing date for the surcharge was December 31, 2016. The extension in the closing date for a period of 18 months - till June 30, 2018 - is expected to result in collection of Rs9 billion which will assist in ensuring successful completion of the project. The government had initially imposed the surcharge in 2007. However, the government has decided to extend the surcharge after cost of Neelum-Jhelum Hydropower Project enhanced to Rs500 billion from previous revised cost of Rs441 billion.

The government had so far collected Rs70 billion through Neelum Jhelum in last ten years. The Pakistan Muslim League-N government was expecting the first unit of the project to become operational by July 2017. The project is now expected to bring its first unit to operations at the end of February 2018 and the other three before the start of next summer, extending the completion date by seven months. The full capacity will be available for use by May 2018.

In pursuance of the decision of the Council of Common Interests (CCI), ECC approved the proposal of Ministry of Water & Power for issuance of Letter of Comfort/GoP guarantee by Finance Division to WAPDA for settlement of Net Hydel Profit (NHP) claims of the Punjab government. Last month, the CCI ratified payment of Rs83 billion NHP to the Punjab government.

The first instalment of Rs38.12 billion will be settled by issuance of irrevocable promissory note of one-year duration to the Punjab government within this month. The balance Rs44.59 billion will be paid in three equal installments of Rs14.85 billion each after tariff determination by the National Electric Power Regulatory Authority (NEPRA). In addition, the Water and Power Development Authority (WAPDA) would continue to pay Rs9.5 billion per year to the Punjab government for entire productive life of the project. The decision would result in an increase of about 33 paisa per unit in tariff for all consumers. The NHP for Punjab had been approved for 1,450 mega watt Ghazi-Barotha Hydropower Project on the analogy of similar payments to Khyber Pakhtunkhwa for power generation from Tarbela dam.

The Finance Division informed the ECC about the latest key economic indicators, including reviews of product’s prices, inflation, commodity stock position, energy figures, foreign exchange reserves, foreign investment, trade performance and tax revenues. The ECC was informed that headline inflation measured by CPI increased by 3.7 percent in December 2016 compared to 3.8 percent in November 2016. On average, during July-December FY 2017, CPI is recorded at 3.88 percent.

ECC was apprised that the reported stock of wheat as on January 3, 2017, is 7.5 million tons showing that sufficient quantity of local wheat is available for daily releases to mills by Provincial Food Departments and PASSCO. The Finance Division informed the ECC that the stock of various POL products averaged 34 days on January 10, 2017. It was also informed that production in the Large Scale Manufacturing sector stood at 2 percent in July-October FY 2017. ECC was apprised that worker remittances received during July-December FY 2017 amounted to $9,459 million. It was also informed that gross foreign exchange reserves stood at $23.183 billion as on January 9, 2017.

ECC approved the summary submitted by Finance Division regarding the Prime Minister’s Package of Incentives for Exporters which has been formulated with a view to mitigate exporters’ difficulties and enhance the country’s exports. The package will have an estimated financial impact of Rs180 billion and is applicable for the period from January 16, 2017, till June 30, 2018. The incentives for FY 2017-18 would only be available to those exporters who would achieve an increase of 10 percent in their exports as compared to their exports for FY 2016-17.