• Subsidy for 25m households to cost Rs50bn during July-September
• PM admits protests by salaried class over higher taxes, energy costs ‘justified’
• Says firms like PNSC ‘eating country like termites’

ISLAMABAD: Prime Minister She­hbaz Sharif on Tuesday acknowledged that the protests by the salaried class and low-consumption power users over additional taxes and higher energy costs are justified and annou­nced a three-month respite in power tariffs for residential consumers using less than 200 units per month.

Speaking at an unspecified televised event attended by government officials, cabinet members and party workers, the prime minister said the relief would last from July to September for residential consumers using up to 200 units. The power tariff will revert to a 51 per cent increase in October.

Flanked by his cabinet colleagues, PM Shehbaz said his government would work tirelessly to combat corruption and address almost Rs6 trillion in revenue leakages at ports, in litigation and through revenue machinery enforcement. “Future relief is possible only if we can block these significant leaks worth billions and trillions of rupees,” he said.

The premier also promised to come up with a business plan within a couple of months for shifting one million agriculture tube wells across the country to solar energy from the imported oil-based national grid. These tube wells would be set up on the pattern of 28,000 tube wells in Balochistan that he announced on Monday with a Rs55 billion estimated cost to save Rs80-90bn annual losses. He said $3.5bn worth of oil imports were being used to run these wells, wasting scarce foreign exchange.

The prime minister said that he would neither “mislead the nation like the PTI founder had done before” nor would he break commitments with the people and international partners for political gains.

Therefore, he said, the Rs4 to Rs7 per unit relief to consumers using up to 200 units per month would be available only for three months. “No doubt that the tariff rebasing increased their burden and their protest and anger is justified”, but the IMF programme was also inevitable to stabilise the economy and then shift towards prosperity, he added.

For this, Rs50bn had been diverted from the development programme while keeping the IMF on board instead of derailing the loan programme, as “the former prime minister had done while cutting utility prices without budgetary allocations and destroying the state and the bailout package”, the prime minister said.

He said the decision would provide relief to 25 million consumers, accounting for about 94pc of domestic consumers across the country, including those of the K-Electric power utility.

The National Electric Power Regulatory Authority (Nepra) separately posted the revised application on its website for a public hearing on Wednesday, in line with the prime minister’s announcement.

The application said the government decided to waive the impact of rebasing for both protected and non-protected non-TOU (time of use meters) domestic consumers using up to 200 units for three months from July to September 2024 for both Discos and K-Electric.

“The rebasing shall be applicable to these consumers with effect from October 2024,” the power division told Nepra and conveyed that the federal cabinet had also approved the “reallocation of Rs50bn from PSDP to fund the additional tariff differential subsidy requirement”.

As such, the consumers in protected category using up to 100 units would be charged at Rs7.74 per unit for July to September and then Rs11.69 per unit with effect from Oct 1. Those using 101-200 units per month would be charged Rs10.06 per unit for three months and then Rs14.16.

For the non-protected consumers, consumption of up to first 100 units would cost Rs16.48 per unit for three months and then Rs23.59 afterwards. Likewise, consumers in the 101-200 units slab would be charged Rs22.95 per unit for three months and then Rs30.07, excluding taxes, surcharges and duties.

The prime minister also conceded that the tax burden on the salaried class had increased, and their protest was justified. However, for the first time, elite and real estate developers had been taxed, raising an additional Rs100bn in revenue. He mentioned that tax rates for these groups should be even higher, but would increase next year.

PM Shehbaz highlighted four major areas of public fund leakage that his administration would focus on. He noted that about $5bn (almost Rs1.4tr) is lost in import-export freight annually, mostly in imports.

He criticised the Pakistan National Shipping Corporation (PNSC) for having only 12 vessels while paying Rs5bn in annual salaries, compared to competitors like Bangladesh with hundreds of vessels. “They are eating the country like termites.”

Likewise, he said, about Rs1.2tr worth of tax evasion is taking place at Karachi Port. This is on top of Rs2.7tr stuck in courts for years and parties on both sides were extracting from the people. “These are the parasites bleeding the body and soul of Pakistan,” he said, adding that these leakages would have to be plugged with the full effort of all stakeholders “if we are to break the begging bowl”.

The prime minister also noted that the federal government had lost over Rs500bn in eight to 10 years in energy bills on account of tube wells in Balochistan at the rate of Rs80-90bn per year. This would now come to an end and the same model would be followed in other provinces as well. He said he was personally monitoring the downsizing of the government footprint and digitisation of the FBR and working on promoting industrial, agricultural, IT and mineral sectors, which he said had great potential to lift the economy.

Published in Dawn, July 10th, 2024