- The phasing out of HRIS is gradual and dependent on the FY26 review.
- SBP caution prevails; no sudden shutdown of the HRIS.
- The transfer of Mari gas stabilizes the availability and prices of fertilizers.
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved a government guarantee of Rs 659.6 billion to settle the debt of Power Holding Limited (PHL) and phase out subsidies under the Home Remittance Incentive Scheme (HRIS) by 2027, News reported.
The government guarantee of Rs 659.646 billion will be provided to PHL to cover loans and payments to IPPs as part of a circular debt financing of Rs 1.225 trillion. The committee said the measures aim to ensure the financial viability of the energy sector, accelerate the settlement of unpaid dues and reduce costs for consumers.
The Council was informed that the central bank had requested the phasing out of incentives for the remittance program.
The Finance Ministry had allocated Rs 100 billion to it as subsidy in the current financial year. The State Bank of Pakistan (SBP) has recommended against abrupt shutdown of HRIS due to the risk of major disruption to door-to-door remittances. Instead, a phased rationalization plan should be put in place on the results of FY26 and then any revisions are suggested.
In the normal scenario, where home remittance dynamics are not severely affected (beyond 10%) due to recent HRIS revisions, the government may consider phasing out the schemes beyond FY27, subject to evaluation. The ECC met under the chairmanship of Senator Muhammad Aurangzeb, Federal Minister for Finance and Revenue, at the Finance Division.
On the proposal of the Petroleum Division, the ECC approved the allocation and pricing of Mari Fields gas to fertilizer plants to ensure adequate and affordable supply of fertilizer on a structural basis.
The ECC took up a summary submitted by the Power Division for tariff rationalization and payment adjustments for Nuclear Power Plants (NPP), Public Power Plants (GPP), OGDCL and SNGPL.
The committee approved the framework agreed between the entities concerned for the settlement of unpaid contributions and the waiver of specific financial claims in order to support budgetary balance and tariff rationalization.
The ECC also reviewed and approved another summary of the Energy Division for issuance of government guarantee of Rs659.646 billion for circular debt financing of Rs1.225 trillion.
In another decision, the committee reviewed and approved a Finance Division summary for phasing out the HRIS. The ECC endorsed a phased and data-driven approach to ensure stable fund flows and avoid any abrupt disruption that could negatively impact the economy.
It was further decided that the government may consider completing the phase-out process beyond FY27, subject to a review of remittance performance and the results of FY26 reviews.
Among the administrative decisions, the ECC approved over Rs960 million for the Ministry of Interior 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 has been deferred.
