ISLAMABAD - The Economic Coordination Committee (ECC) of the Cabinet on Saturday allowed WAPDA to take a loan of Rs25 billion from local banks, under the sovereign guarantee of the government, for paying arrears for Net Hydel Profits (NHP)to Khyber Pakhtunkhawa.

The ECC, which met here under chairmanship of Finance Minister Ishaq Dar, also accorded approval to the payment of two-month salaries to the employees of Pakistan Steel Mills (PSM), amounting to Rs858 million.

The Ministry of Industries and Production, last month, had recommended the payment of salaries of seven months (December to June 2016) to the PSM employees, which is not operational for the last 11 months due to several reasons.

The ECC also okayed the revision of margins of Oil Marketing Companies (OMCs) and dealers on petroleum products.

According to the recommendations of the Ministry of Petroleum and Natural Resources, the margins are now linked to Consumer Price Index (CPI).

The increase is meant for these companies: 6 paisas for MS Petrol and HSD for the OMCs; 8 paisas for MS Petrol and 7 paisas for HSD for the dealers.

The new margins will be applicable from July 1, 2016 onwards. Sources informed that margins on petrol and diesel would rise from Rs2.35 to Rs2.41 per litre for the OMCs and will go up from Rs3.08 to Rs3.16 per litre on petrol and from Rs2.60 to Rs2.67 per litre on diesel for the dealers.

Earlier, the Oil and Gas Regulatory Authority (OGRA) had not agreed to the increase in margins on petroleum products, based on the movement of the Consumer Price Index (CPI). “It is not right to link the rise in OMC and dealer margins with the CPI,” the OGRA had stated.

The top decision making body of the country on economic matters, the ECC, has also allowed WAPDA bank surety of Rs25 billion for the hydel profit of KP.

This came in the wake of a formal memorandum of understanding (MoU) signed by Water and Power Minister Khawaja Asif, Finance Minister Ishaq Dar and KP Chief Minister Pervez Khattak on February 25, which was subsequently approved by the CCI on February 29.

A total amount of Rs.70 billion was settled between the federal and the KP governments on account of uncapped NHP as full and final settlement of the claims.

The amount will be paid in four tranches, with Rs25 billion to be paid in the current financial year and Rs15 billion every year for the next three years.

Meanwhile, the ECC has also extended the date for reducing the rate of Withholding Tax on banking transactions

To a proposal, given by the Ministry of Water and Power, for providing fiscal incentives for promoting energy efficiency and conservation, Dar observed that such proposals could only be entertained through a Finance Bill.

He further said that the Ministry of Industries, Ministry of Climate Change, FBR and the Ministry of Water and Power should together put forward a proposal for its inclusion in the Finance Bill.

The ECC also approved extension in the period of Export Processing Zone Status of Duddar Project.

The extension will now continue till January 14, 2035, and will facilitate foreign investment in a project of public interest.

The recommendation for an extension had been given by a special committee formed under the chairmanship of special assistant to prime minister on Law.