Subsidies slashed by over 32 percent

Federal government has slashed subsidies by over 32 per cent to Rs 137.603 billion for 2015 -16 from Rs 203.248 billion allocated in 2014-15 in accordance with an understanding between the Finance Minister and International Monetary Fund(IMF). According to federal budget documents, subsidy to Pepco has been reduced to Rs 98 billion for 2015-16 from original allocation of Rs 156 billion earmarked in the current fiscal year showing a reduction of 37 per cent. However, a comparison of revised allocation of Rs 185 billion with original allocation indicates that subsidy of power sector has been slashed by 47 per cent. Of this inter-Disco tariff differential has been slashed to Rs 60 billion for 2015-16 against Rs 150 billion earmarked for 2014-15 which was later increased to Rs 174 billion. The allocation for Pepco receivables from FATA has also been reduced to Rs 900 million for 2015-16 from Rs 1 billion. An amount of Rs 19 billion has also been earmarked in federal budget for subsidy to Pepco on account of inter-Disco tariff differential (arrears) and Rs 4 billion to pick up AJK receivables.
The subsidy allocation for K-Electric has also been reduced by 31 per cent to Rs 20 billion for 2015-16 from original allocation of Rs 29 billion earmarked for current fiscal year which was later revised upward to Rs 36 billion. Budget documents further reveal that there will be no change in subsidy to Utility Stores Corporation (USC). Government had earmarked Rs 7 billion for USC in 2014-15 which was later revised upward to Rs 10.850 billion of which Rs 3 billion is earmarked for Ramazan package and Rs 4 billion for subsidy on sale of sugar. This shows that the subsidy will remain the same as in 2014-15.
The government has increased subsidy to Passco to Rs 11.3 billion in 2015-15 against an allocation of Rs 8 billion earmarked in budget 2014-15 and later on revised upward to Rs 10.850 billion. Of this amount, Rs 5 billion has been allocated as cost differential for sale of wheat against Rs 4 billion in 2014-15 and Rs 5 billion for wheat reserved stock against Rs 4 billion. No amount is allocated for support of wheat/flour export despite the fact that 55 billion was given in revised budget for this purpose. An amount of Rs 1.3 billion has been allocated for payment of freight subsidy on sugar to TDAP which has yet not released a single penny to sugar exporters. The case of sugar subsidy is already being investigated by the National Accountability Bureau (NAB).
The government has also allocated Rs 1 billion for oil refineries and Oil Marketing Companies (OMCs) in 2015-16 against Rs 2 billion earmarked for 2014-15. Subsidy has been increased from Rs 293 million to Rs 303 million for sale of wheat for FATA whereas no amount is allocated for sale of wheat and salt to Gilgit Baltistan despite the fact that Rs 855 million were earmarked in 2014- 15 for this purpose.