Having collected about Rs100 billion, the government has decided in principle to finally do away with Neelum-Jhelum surcharge, currently applied to all electricity consumers at the rate of 10 paisa per unit, after 13 years.
A summary to this effect is expected to be approved by the Economic Coordination Committee (ECC) of the Cabinet in its meeting on Friday that is also expected to provide tax relaxations to Chinese companies involved in development of hydropower projects in Azad Kashmir.
To be presided over by Finance Minister Dr Hafeez Shaikh, the ECC is also expected to approve a supplementary grant to Special Communications Organisation (SCO) during the current fiscal year, outstanding payment of Ocean Wide Shipping Services of Germany by Pakistan Steel Mills and revision in prices of essential commodities for provision of subsidy under PM’s Relief Package 2020.
The meeting will also take up a communication support to Ehsas Programme, constitution of a committee for resolution of taxation issues in the information technology and telecom sector and issuance of a sovereign guarantee to National Electronics Complex of Pakistan.
A senior government official told Dawn that Power Division of the Ministry of Energy has moved a summary for doing away with the surcharge with immediate effect because of widespread criticism from various parliamentary bodies. On approval, a formal notification would be issued immediately to stop collection of the surcharge through electricity bills.
Responding to question about reports of replacing it with some other project specific charges for financing of Diamer-Basha and Mohmand dams, the official said the government may have some considerations about such things but that was not part of the instant summary.
The surcharge was imposed in 2007 for part financing of Neelum-Jhelum Hydropower Project with a sunset clause of Dec 31, 2015 — the completion target of the project started at the time with an estimated cost of Rs130bn. It was envisaged that half of the financing would be generated through this surcharge on every unit of electricity sold to consumers in eight years.
The cost of 969-megawatt run of the river project in Azad Kashmir, however, kept on increasing and was completed in 2018 at about Rs500bn. The 10-paisa per unit surcharge was extended for one year and another 18 months until July 1, 2018 but has continued until now. By 2018, an amount of Rs75bn had been collected. Depending on power consumption, the annual surcharge generates about Rs10bn per annum.