Rs151 billion ‘subsidy’ to shield power users from line losses
• Dastgir reveals plan to dole out Rs315bn to ‘equalise’ K-Electric tariff with rest of country
• Minister claims IMF okay with budgeted Rs894bn power package
LAHORE: In a bid to offset the burden shouldered by power consumers due to the line losses of distribution companies (Discos), the government has decided to introduce a ‘budgeted’ subsidy to the tune of Rs151 billion to provide relief to customers across the country, except Karachi.
For the port city, however, a Rs315bn package has been prepared that is aimed at making tariffs uniform by providing K-Electric billions of rupees in tariff differential subsidy (TDS), which would bring the cost of electricity in the provincial capital of Sindh on a par with the rest of the country.
The entire relief package, all set to be introduced in the upcoming fiscal year, is worth Rs894bn and also includes payments of billions of rupees to Independent Power Producers (IPPs).
In a press conference on Monday, Power Minister Khurram Dastgir said that power distribution companies based in Lahore, Islamabad, Gujranwala, Faisalabad, Multan, Sukkur, Hyderabad, Quetta, and Peshawar would cumulatively get Rs151bn in subsidy to overcome their line losses and other issues.
“The International Monetary Fund (IMF) knows about this subsidy, support or relief, as all of this is budgeted. The Fund accepts such subsidies,” the minister claimed in response to a question.
He said the government was engaged with the IMF on all issues and managed to save Pakistan from default despite difficult circumstances.
Mr Dastgir said the volume of the entire subsidy or support for the power sector, minus Karachi, is Rs579bn which included Rs151bn as TDS for Discos, Rs25bn for the erstwhile Fata region, Rs80bn for Azad Jammu Kashmir, including Rs55bn for the upcoming financial year, Rs17bn in industrial support, Rs64bn (pending for the current year) as subsidised tariff for export zero-rated industry, and Rs58bn for the agriculture (tube wells) in Balochistan. “You take as subsidy, support or relief, as the government will pay this all in a bid to avert shifting this load on consumers,” he maintained.
Sharing details of the subsidy for Karachi, the minister said Rs315bn for the city alone included Rs171bn for FY 2023-24 and Rs127bn as TDS pending for the ongoing fiscal year ending on June 30. The rest of Rs17 billion is for the industrial support package in terms of power tariff, he said,. “We can see this relief package as cross-subsidy to equalise the electricity tariff of Karachi with the rest of Pakistan.”
Talking about power generation, the federal minister claimed that the government has succeeded in adding 5,000 megawatts to the national grid, including 1980MW by Thar Coal, 720MW by Karot Hydropower Project, 1100MW by K-3 nuclear power project, and 1200MW by Punjab Thermal Power Project. He said though there was no power shortfall in the country, Discos will continue observing load shedding for limited hours keeping in view the category and gravity of line losses in the area. “However, the minimum load shedding will be for two hours whereas it will increase in the areas falling in the high-loss feeders,” he clarified.
To a question, he claimed that the issues related to the shortage of material have been resolved by most companies, as the Lahore Electric Supply Company has “recently received 10,000 new electricity meters”.
The minister said the government had also decided to shift the entire industrial connections to advanced metering infrastructure (AMI) in a bid to curtail power theft. “We are also giving enforcement powers to all Discos so that they could have powers to take action independently against theft of electricty.
Meanwhile, a power sector expert termed the package an “interim relief” that was also given by previous governments. “The TDS is not a new thing, as the government use to give this (whether small or big) to Discos and even the K-Electric in the past,” he said, adding that the electricity tariff of all Discos was different keeping in view the losses, expenses, recovery etc.
“But when the bill is finally sent to the consumers, it has equal unit rates for all keeping in view the slabs. So to settle and adjust this, the government always give subsidy for giving equal tariff. But the Karachi tariff is higher than the rest of Pakistan keeping in view their line losses and other issues related to recovery, especially from the water board,” he explained.
Therefore, this time the government massively increased this subsidy, especially for Karachi consumers, and a few high-loss-making companies i.e. Sepco, Qesco and Pesco.
In a question about Imran Khan, he said the PTI chairman spearheaded a “conspiracy against the state” and the law would take its course in connection with violent protests on May 9.
Published in Dawn, June 13th, 2023