According to knowledgeable sources who spoke to the local business newspaper, the Prime Minister’s Office (PMO) has instructed the Federal Board of Revenue (FBR) to change or revise the Income Tax Ordinance in the upcoming budget in order to begin supplying Thar coal to the local industry sector.
These instructions were given during a meeting in the PM’s office with Mohammad Jehanzeb Khan, SAPM on Efficient Governance, to address problems with Sindh Engro Coal Mining Company (SECMC).
Transmission line construction is currently 77 percent complete and progress is on schedule, according to National Transmission and Dispatch Corporation (NTDC). It emphasized the Right of Way issue in Sindh’s Tando Allahyar district.
Officials from NTDC insisted that if the Right of Way issue is not handled, the entire project may be delayed.
Current Tax Law for Usage of Thar Coal
According to a provision in the Income Tax Act (Section 65) that states that the aforementioned credit may only be taken advantage of if the coal is supplied exclusively for power production, the Federal Board of Revenue (FBR) has informed SECMC that it is not permitted to supply surplus coal to the industry.
The existing provision in the Income Tax, according to an FBR representative, can be modified in order to maximize the use of Thar coal.
Secretary of Railways highlighted that CDWP suggested a 50/50 cost-sharing arrangement between the Federal Government and the Government of Sindh for “Thar Coal Train Connection” at its meeting on December 22, 2022.
Since then, the demand for coal has increased, but the government of Sindh appears more interested in a revenue-sharing arrangement than in offering loans.
After a thorough discussion of the concerns and taking into account the opinions of all the attendees, it was decided that NTDC will finish all construction on the transmission line by the end of April 2023. The Prime Minister’s Office will also get a weekly report from NTDC.
The strategic roadmap team for the electricity sector was mandated by the meeting to add milestones to the PM’s stocktaking and ongoing monitoring.
The conference also determined that Chief Secretary Sindh will address the Right of Way issue that NTDC was experiencing in the district of Tando Allahyar on a priority basis.
In order for domestic industry to profit from Thar coal, FBR must take appropriate adjustments to Section 65(F) of the Income Tax Ordinance into consideration in the upcoming Budget Bill.
The State Bank of Pakistan was tasked with resolving the issue of outstanding LCs for SECMC’s import of coal-related gear in collaboration with commercial banks.
The Secretary of Planning will call a meeting on Thar coal rail connectivity in response to the increased demand and develop financing options for Pakistan Railways’ project in accordance with the CDWP decision of December 22, 2022, which decided to split costs 50/50 between the Federal Government and the Government of Sindh.
To read our blog on “Thar coal is essential for survival, experts said,” click here.
