Daily Times

ISLAMABAD: A special legislative body of the Upper House of the Parliament on Tuesday stressed the need for providing targeted subsidy on electricity as the government had set aside about Rs150 billion for the purpose in the fiscal year of 2018-19.

The Senate Special Committee on Circular Debt held its meeting with Syed Shibli Faraz in chair. “We need to provide targeted subsidy on electricity and provide relief to low-income people,” said the convener Syed Shibli Faraz.

The meeting was convened to discuss various issues pertaining to the mounting circular debt and to find solutions. Among others, the meeting was attended by Senators Sikandar Mandhro, Bahramand Khan Tangi and officials from ministries of finance, water resources and power, as well as representatives of power distribution companies, the Alternate Energy Development Board (AEDB) and other relevant departments.

The committee was briefed by the Finance Division senior joint secretary that the circular debt of Rs514 billion had accumulated until December 2017. He informed the committee that Rs290 billion was for the energy sector, Rs105 billion for capacity charge and the rest were miscellaneous charges.

The markup, he revealed, had been adjusted in consumer tariff which is billed as surcharge to the consumer. The convenor, Senator Faraz, showed displeasure about the fact that the consumer was being burdened. He also inquired whether any checks and balances were in place while approving funds. The senior JS Finance, while responding to the question, said that the Ministry of Finance oversees the matter and approvals are made only after reviewing all details.

The Ministry of Power’s joint secretary informed the committee that the government would provide Rs150 billion subsidy during the current fiscal year, including Rs92 billion as tariff differential subsidy, Rs12 billion agriculture power consumption subsidy and Rs9 billion in Baluchistan province. Similarly, Rs31 billion would be provided to K-Electric and Rs15 billion to the industry through the Industrial Support Package, he said. The subsidy would facilitate low-income consumers using 100-300 units of electricity as well as the industrial and agriculture sector.

Further, the committee discussed in detail the issue pertaining to circular debt and observed that the circular debt was piling up due to many issues, including delay in releases of agricultural and tariff differential subsides, poor recovery, transmission and distribution losses, and determination of the tariff.

The committee was informed that as many as Rs231.117 billion were receivables as on December 2017, which include Rs172 billion receivables from consumers, Rs21.075 billion agricultural subsidy from federal government, Rs17.796 billion agriculture subsidy from the government of Balochistan, and Rs20.245 billion tariff differential subsidy. Similarly, there were about 22.24 percent losses, having financial impact of Rs3.528 billion. “Resolution of circular debt should be a top priority,” the convener said, observing that it was affecting public sector entities including Pakistan International Airlines.

On the occasion, the joint secretary of the Ministry of Power informed the committee that there were 26 million electricity consumers including 0.327 agriculture consumers (1.2 percent). He said 51 percent consumers were using less than five kilowatt electricity, while 23 percent were using more than five kilowatt electricity.

On the occasion, the Balochistan QESCO informed the committee that recovery in domestic and commecial sectors stood at about 86 percent, however, he added that there were nominal recoveries in agriculture sector.

The Alternate Energy Development Board (AEDB) CEO also gave a detailed briefing to the committee and highlighted various areas where active interventions were required to tap the potential of alternate energy. He particularly mentioned Balochistan as having more potential in alternate energy development than Sindh.

Published in Daily Times, July 4^th 2018.