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Govt to Amend Tax Laws and Allow Supply of Thar Coal to Industry

The Prime Minister’s Office has ordered the Federal Board of Revenue (FBR) to amend the Income Tax Ordinance in the upcoming budget in order to begin supplying Thar coal to local industry.

These directives were issued during a meeting in the Prime Minister’s Office to address issues concerning Sindh Engro Coal Mining Company (SECMC) under the chairmanship of Mohammad Jehanzeb Khan, SAPM on Effective Governance, reported Business Recorder.

The National Transmission and Dispatch Company (NTDC) stated that transmission line construction is on schedule and has already reached 77 percent completion. It drew attention to the Right of Way issue in Sindh’s Tando Allahyar district. They said if the Right of Way issue is not resolved, the entire project may be delayed.

The FBR informed that SECMC may not supply excess coal to the industry due to a provision in the Income Tax Ordinance (Section 65) that states that the credit can only be claimed if the coal is supplied solely for power generation. The existing provision, according to FBR representatives, is restrictive and should be reviewed.

Secretary Railways noted that the CDWP, at its meeting on December 22, 2022, proposed a 50-50 split of the cost of “Thar Coal Rail Connectivity” between the Federal Government and the Government of Sindh. Since then, coal demand has increased.

Following a thorough discussion of the issues, it was decided that NTDC will complete all work on the transmission line by the end of April 2023. The meeting also decided that the power sector’s strategic roadmap team will add milestones to the PM’s stocktaking and regular monitoring.

Chief Secretary Sindh will prioritize resolving the NTDC’s Right of Way issue in the district of Tando Allahyar. Meanwhile, the FBR will consider appropriate amendments to Section 65(F) of the ITO in the next Finance Bill so that local industries can benefit from Thar coal.

The State Bank of Pakistan has been tasked with resolving the issue of SECMC’s pending letters of credit for the import of coal-related machinery.

Additionally, the Secretary of Planning might soon convene a meeting on rail connectivity of Thar coal in accordance with the firmed-up demand and develop financing modalities of the Thar coal rail connectivity project of Pakistan Railways.

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