Provinces oppose deduction of power bills by centre

ISLAMABAD: Provinces have opposed committing budget surpluses to the centre and at least two of them have protested over at-source deduction of electricity bills against their divisible pool transfers.
A senior government official told Dawn on Thursday that about Rs8-10 billion were deducted before the conclusion of last fiscal year on June 30 against provincial outstanding power bills and the cuts were proportionately applied to four provinces according to the size of the respective arrears.
The cut was applied to all Sindh, Punjab, Balochistan and Khyber Pakhtunkhwa, said the official without sharing breakup.

The highest deduction of Rs5 billion was, however, applied to Sindh that is now on the forefront of protest.

We have protested in writing against at-source deduction. We will formally take up the matter at the Council of Common Interests (CCI), said Sindh finance minister Syed Murad Ali Shah.

He said the centre had deducted Rs5 billion from Sindhs share which is not only unfair but unconstitutional.

He said the Sindh government had also opposed at-source deduction of electricity dues proposed by the federal government as part of power policy.

The electricity bills have been problematic in the past and disputes resolved by arbitration in Sindh146s favour.

A senior official of KPK government said the federal government wanted the provinces to act as subordinate agencies of the Wapda but that would not happen in practice.

He said KPK chief minister Pervez Khattak had told the federal government that he would provide maximum security to Wapda staff to identify theft and recover dues but should not be expected to take over the role of Wapda146s collection agent.

A senior Sindh government official said the provinces did not commit any revenue surplus at the recent CCI meeting as reported in a section of press.

The item of revenue surpluses did not even come up for discussion at the CCI meeting, headed by the prime minister and hence it was illogical for the provinces to give or not to give any commitment.

He said the Sindh government was surprised to see reports attributing finance ministry officials that provinces had committed to provide Rs117 billion surplus during current fiscal year.

We will not only formally protest but also challenge the finance ministry to make public the minutes of the CCI meeting to prove if provinces had committed to offer revenue surplus, he said.

A source in the finance ministry said the finance division was given to understand that provinces had agreed to provide Rs117 billion surplus with the provision that if the FBR achieved its Rs2475bn target and provincial revenue stream remained normal.Finance Ministry146s spokesman Rana Assad Amin when contacted said he did not attend the CCI meeting and hence would not comment on the issue as long as CCI minutes were circulated.

The issue of budget surpluses or any other fiscal adjustment has to be taken up at the forum of National Finance Commission (NFC), the Sindh official said, adding the CCI was not a relevant forum to start with.

Finance minister Ishaq Dar had put Rs23bn surplus from provinces on the basis of Rs2,475bn FBR revenue in the budget speech, how can they expect us to offer Rs117bn surplus now, he said.

On top of that the provinces had announced deficit budgets with a cumulative deficit of about Rs100 billion. How would they be expected to make Rs227bn adjustment within weeks after the budgets were approved? he said.

Moreover, the FBR has never been able to achieve tax target and hence any shortfall has to proportionately reduce provincial resources.

He said the Sindh government was currently considering three options to take up the question of at-source deduction of electricity arrears which it believed was against the spirit of the constitution.

There are three forums to take up the issue, including CCI, NFC and direct discussion with the federal government, said the official, adding the provincial government would go to any extent to protect its rights.

NFC transfers to provinces are sacrosanct under the constitution and could not be set off against anything without express agreement of the federating units, he said.

To begin with, the forthcoming meeting of the working group of chief secretaries and other provincial representatives constituted by the CCI on power policy would also take up the issue of at source deductions, he said.