Pakistani Government announces free electricity for SMEs during corona virus

Economic Coordination Committee (ECC) of the Cabinet approves Rs 50.69 billion package

It provides indirect cash flow support to the small and medium size enterprises (SMEs) through pre-paid electricity

Pakistani Government announces free electricity during corona virus. Adviser to Prime Minister on Finance & Revenue Dr Abdul Hafeez Shaikh was in chair. It also approved a credit loss subsidy. This subsidy of Rs 30 billion is for the Risk Sharing Facility for State Bank of Pakistan’s Refinance Scheme. It will support employment and prevent lay-off of workers.

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Chota Karobar o Sannat Imadadi Package

Under the Rs 50.69 billion package titled as ‘Chota Karobar o Sannat Imadadi Package’ approximately 95 per cent commercial consumers with connected load up to 5 KW and 72 per cent of industrial consumers with connected load of up to 70 KW would be provided financial support. It is prepared by the Ministry of Industries and Production. Moreover, it includes active consultation with Small and Medium Enterprises Development Authority (SMEDA). Under the scheme, commercial consumers would be given support up to Rs 100,000. The industrial consumers up to Rs 450,000 for three months.

The base period for estimating electricity consumption would be May-July 2019. For meters for which electricity consumption data is not available for the full base period, appropriate average will be used. To avail of the facility, pre-paid electricity bills of three months or total bills during the base period would be required. The period of consumption of the extended financial support would be six months starting from May/June 2020.

The ECC also allowed Rs 2.5 billion block allocation to the AJK and GB for disbursement through special arrangement. It further instructed the Ministry of Industries and Production to bring up similar relief packages. These packages will be for the agriculture sector including the agricultural tubewells, as well as transporters and the microfinance sector.

Credit Loss Subsidy

The ECC on a proposal by the Finance Division also approved a credit loss subsidy of Rs 30 billion. This subsidy is for the Risk Sharing Facility for State Bank of Pakistan’s Refinance Scheme. It will support employment and prevent lay-off of workers. Under the scheme, financing would be extended to businesses with maximum sales turnover of Rs 2 billion. The Government of Pakistan would bear 40 per cent first loss on distributed portfolio (principal portion only) for eligible borrowers. In case of repayments, after being classified as “loss” as per classification criteria under the respective SBP Prudential Regulations.

List of Members of ECC: http://www.cabinet.gov.pk/userfiles1/file/ECC.pdf

The banks and DFIs assigned limits under SBP scheme would be eligible executing agencies. On a proposal by the Ministry of Economic Affairs, the ECC accorded in principle approval to the external debt restructuring. The government will be availing the G-20 debt relief and engaging with bilateral donors for individual debt suspension.

On another proposal by the Ministry of Defence, the ECC also approves allocation of additional funds. These funds are in the form of technical supplementary grant to the tune of Rs 3.02 billion. This fund is for the fencing of Pak-Iran border.

Thus, Pakistani Government announces free electricity during corona virus.