Govt approves Rs 98 Billion export subsidy package as shipments fall 6%.

The Economic Coordination Committee on Monday cleared a Rs98 billion interest subsidy package for exporters while also approving Rs4 billion to defend international arbitration claims filed by independent power producers.

Export Schemes and Litigation Funding Approved

Finance Minister Muhammad Aurangzeb chaired the meeting that endorsed three dedicated export finance schemes recommended by the State Bank for the current fiscal year onwards.

The government will pick interest costs of up to 11.5% under the package. Working capital under the enhanced Export Finance Scheme will be available at 8.5% for six months, with the state covering 5% of the cost at a Rs58 billion expense this year.

Portfolio size under the short-term scheme has been expanded to Rs1.5 trillion from Rs1 trillion. A new long-term facility will provide financing at 2% for two years followed by a fixed 5% rate for eight years, aimed at new projects and modernisation.

Projected disbursements of Rs350 billion under the long-term window will require subsidies of about Rs196 billion overall, with Rs25 billion budgeted for this fiscal year. A performance-based rebate scheme for incremental exports, costing Rs15 billion annually, will reward growth of up to 10% with a 1% rebate and higher growth with 2%.

Exports contracted 6% last year despite previous incentives. The government has shifted priority toward export support after withdrawing a Rs76 billion remittance subsidy last month. Exports lagged remittances by $11.5 billion in the previous fiscal year.

Separately, the ECC approved a Rs4 billion supplementary grant to meet legal costs of multiple international arbitration cases filed by independent power producers and major utility shareholders. One claim of $2 billion has been lodged by Saudi and Kuwaiti investors over the blocked sale of K-Electric shares.

The Power Division had sought Rs4.2 billion to clear pending dues arising from earlier proceedings. The cases include arbitration under the Organisation of Islamic Cooperation investment agreement.

Gas Tariff Adjustment for Power Plants Cleared

The committee also fixed the tariff for indigenous gas supplied to RLNG-based power plants on the SNGPL network for April to June 2026 at Rs2,000 per mmBtu. Full cost recovery was ordered for any imported gas component.

The adjustment is expected to raise electricity prices by nearly Re1 per unit through the monthly fuel cost adjustment mechanism. All RLNG consumers continue to be charged the monthly notified price set by the regulator.