BR reported that the government is paying PKR 25 billion monthly subsidy on account of tariff differential, line losses and non collection of bills despite massive increase in power tariff during the last three years.

Sources said that subsidy for the current fiscal year would be over PKR 117 billion if the proposed 12% increase in power tariff is not made effective.

An official said that the government had given PKR 1 trillion subsidy on account of power sector from 2007 to 2008 to date. Subsidy of PKR 114 billion was given to the power sector in the fiscal year 2007 to 2008 on account of tariff differential and line losses including non recovery of electricity bills by distribution companies which jumped to PKR 391 billion in 2008 ton 2009.

However, subsidy to power sector decreased to PKR 147 billion in 2009 to 2010 largely due to increasing power tariff following pressure by the International Monetary Fund to minimize the subsides in power sector and to other state owned enterprises.

The official said that subsidy to the power sector increased to PKR 346 billion in the last fiscal year because Pakistan was not in the IMF program after May 2010 mainly because of failure to meet some performance benchmarks including those pertaining to the agreed reform process for the energy sector.

Source said that the Cabinet Committee on energy, headed by Finance Minister Dr Abdul Hafeez Sheikh proposed 12% increase in power tariff in the ongoing fiscal year. The inter ministerial committee worked out PKR 117 billion and requested 12% increase in power tariff in the current fiscal year to recover PKR 67 billion and remaining PKR 50 billion would be paid by the government as subsidy.

The amount included PKR 24 billion for line losses in addition to 16% allowed by National Electric Power Regulatory Authority, PKR 70 billion on account of non collected bills and another PKR 24 billion revenue loss on account of fuel adjustment.

The distribution companies are allowed 16% transmission losses whereas their actual cumulative transmission losses have been estimated at 19% and above and energy committee reportedly requested the government to allow distribution companies full adjustment of lines losses.

An official of Water and Power Ministry claimed that tariff differential was minimized to 1.99 per unit from PKR 2.86 per unit by shutting down oil and gas guzzling power generation plants. Average electricity cost per unit is PKR 9.40 and the government is charging PKR 7.83 from the consumers reflecting a tariff difference of PKR 1.57 per unit.

The government has worked out PKR 41 billion subsidy for consumers utilizing 100 units per month in the current fiscal year followed by PKR 22 billion to life line consumers using up to 50 units. The subsidy of PKR 6.12 billion is to be extended to those consuming 101 to 300 units.

(Sourced from www.brecorder.com)