- HRIS phasing out is gradual, subject to FY26 review.
- SBP Caution Advises; no sudden HRIS cutoff.
- Mari gas relocation stabilizes fertilizer availability and pricing.
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet approved a government guarantee of Rs 659.6 billion to settle Power Holding Limited (PHL) debt and phase out subsidies under the Home Remittance Incentive Scheme (HRIS) by 2027, The news reported.
The government guarantee of Rs659.646 billion will be issued to PHL to cover loans and payments to IPPs as part of Rs1.225 trillion circular debt financing. The committee said the measures aim to ensure the financial sustainability of the energy sector, speed up the settlement of outstanding charges and reduce costs for consumers.
The Council was informed that the central bank had requested to gradually abandon the incentives for remittances.
The finance ministry had allocated Rs100 billion for it as a subsidy in the current financial year. The State Bank of Pakistan (SBP) recommended an abrupt end to the HRIS due to the risk of major disruptions in remittances. Instead, a gradual rationalization plan for the results of FY26 should be put in place and any revisions proposed thereafter.
In the normal scenario where momentum in remittances is not severely affected (beyond 10%) due to recent revisions in HRIS, the government may consider phasing out the schemes beyond FY27, subject to an evaluation. The ECC met under the chairmanship of Senator Muhammad Aurangzeb, Union Minister for Finance and Revenue, in the Finance Department.
On the proposal of the Petroleum Division, the ECC approved the allocation and pricing of gas from Mari Fields to fertilizer plants to ensure an adequate and affordable supply of fertilizer on a structural basis.
The ECC took up a summary submitted by the Power Division for rationalization of tariffs and payment adjustments for Nuclear Power Plants (NPPs), State-owned Power Plants (GPPs), OGDCL and SNGPL.
The committee approved the agreed framework among the affected entities for settlement of outstanding charges and remission of specific financial requirements to support fiscal balance and tariff rationalization.
The ECC also considered and approved another summary of the Power Division for the issuance of a government guarantee of Rs659.646 billion for circular debt financing of Rs1.225 trillion.
In another resolution, the committee considered and approved a summary from the Finance Department for the gradual phase-out of HRIS. The ECC approved a phased, data-driven approach to ensure stability of money inflows and to avoid any sudden disruption that could adversely impact the economy.
It was further decided that the government may consider ending the phase-out process after FY27, subject to a review of remittance results and the results of the FY26 audits.
Among administrative decisions, the ECC approved over Rs 960 million. to the Ministry of Home Affairs and sought a report from the CDA on the future of PWD personnel. A summary from the Ministry of Maritime Affairs regarding the use of PIBT was postponed.
