The Ministry of Energy (MoE) wants Rs. 1.54 trillion in power subsidies for the fiscal year (FY) 2023-24 with the goal of reducing circular debt to a level agreed upon with the International Monetary Fund (IMF).
The Rs. 1.54 trillion cash is required in the fiscal year 2023-24 to avoid further increases in circular debt and settle arrears. The amount includes Rs. 250 billion for the payment of dues for China-Pakistan Economic Corridor (CPEC) energy projects, reported Express Tribune.
More details suggest the Rs. 1.54 trillion demand is roughly 70 percent or Rs. 634 million higher than power subsidies for FY23, and 203 percent higher than the original budget. It is expected that the finance ministry may again provide less-than-required funds to manage both the flow and stock of circular debt.
MoE has requested Rs. 164 billion in price differential subsidies for government-run power distribution companies for FY24, while Rs. 170 billion is being sought to cover the cost of subsidy for K-Electric customers. Similarly, it has asked for Rs. 7 billion to settle arrears of the Prime Minister’s Industrial Support Package for KE customers next fiscal year.
The ministry wants Rs. 260 billion to clear private power producers’ outstanding debts, another Rs. 195 billion to pay subsidies to Quetta Electricity Supply Company, and Rs. 48 billion in the new budget for the erstwhile FATA region. Additionally, it has requested a further Rs. 127 billion to clear the arrears of AJK consumers who receive heavily subsidized electricity.
Amid exorbitant energy prices and MoE demanding trillions in subsidies, the government has already approved an additional Rs. 335 billion in power sector subsidies for the current fiscal year after getting IMF approval. From these subsidies, Rs. 205 billion has already been allocated.
It should be noted that while authorities gear up to consider the massive request of the energy ministry, the government has so far added a net Rs. 419 billion to the power sector’s circular debt in the first eight months of the current fiscal year despite the blood-curdling tariff increases, bringing the total circular debt to Rs. 2.67 trillion.
From July to February, the average monthly increase in circular debt was Rs. 52.4 billion. At the start of FY23, the circular debt stood at Rs. 2.25 trillion.
Source: Pro Pakistani