ISLAMABAD: The Ministry of Water and Power (MoWP) has submitted a claim to Ministry of Finance in order to grant subsidies to consumers during the month of May and June and Finance Ministry has shown complete cold response in this regard.
In current year, MOWP may face shortage of funds which is likely to be passed on to consumers. The sources told Daily Times that the Finance Ministry has already released a Rs 121 billion subsidy to the power sector so far, adding that the claims of subsidy for May and June 2016 will be submitted accordingly, hoping the amount of subsidy will stand around Rs 20 billion against these claims for two months.
The Ministry of Water and Power has increased the subsidy 44 per cent in the financial year 2016-17. Ministry has reportedly sought an Rs 208 billion subsidy against Rs 144 billion earmarked for the current fiscal year.
The Rs 144 billion subsidy include Rs 9 billion in respect of K-Electric, Rs 10 billion subsidy to AJ&K and FATA and Rs 7 billion to agriculture tube-wells in Balochistan. However, the government had earmarked Rs 118 billion in the budget of 2015-16 as Tariff Differential Subsidy to maintain equal tariff within Distribution Companies (Discos) across Pakistan and the total amount of subsidy was Rs 144 billion.
The sources said that Rs 65 billion will be collected from out of the total Rs 208 billion from consumers through surcharges which have already been made part of tariff. The main reason behind a 44 per cent increase in subsidy for the next fiscal year, the sources clarified that with addition of new power production into the system next year sale of electricity is expected to increase by 20-25 per cent.
The government had allocated about 0.1 per cent of GDP of budgetary resources to clear outstanding arrears that accrued in AJ&K, FATA and Balochistan.
The drop of Rs 3 per unit in industrial tariff would be made part of the tariff next year which will also enhance the volume of subsidy he added. The payables in the power sector were around Rs 350 billion in April 2016 against Rs 320 billion in October 2014.
The source further revealed that Ministry of Water and Power and Economic Reforms Unit (ERU) of Finance Ministry collectively already prepared a monitoring mechanism to sort out the stock and flow of payables at all levels of the energy sector, including Power Sector Holding Company Limited (PHCL). The debt holding company, i.e., PHCL recently got approval of Economic Co-ordination Committee (ECC) of the Cabinet to review Rs 25 billion loans of commercial banks as the Discos are unable to pay off loans. Experts have said that government policies are not comprehensive for upgradation of industry. Storm of inflation will overtake the country if electricity is provided to the consumers at higher rates and common man will be badly affected by it.