The Finance Ministry has earmarked 6 percent lower subsidy for the power sector for 2017-18 vis-à-vis demand of the Ministry of Water and Power, which is unable to meet contractual obligations with the Independent Power Producers (IPPs) and Pakistan State Oil (PSO).
One of the officials of Water and Power told Business Reorder that Ministry of Water and Power had sought subsidy of Rs 125 billion for power sector in 2017-18 but Finance Ministry earmarked Rs 118 billion which is Rs 7 billion or 6 per cent less than its demand.
Of this, Rs 65 billion has been allocated to equalized inter-Disco tariff differential which according to power sector analysts is massively under budgeted. The budget documents show that the government had earmarked Rs 60 billion for inter-Disco tariff differential in 2016-17 but revised estimates show Rs 91 billion allocation which is 51.6 per cent higher than what was budgeted. This trend will continue in the next fiscal year and the government has to raise TDS amount to Rs 95 billion or so, sector experts maintained.
The Finance Ministry, however, has reduced KE's tariff differential subsidy by 32 per cent to Rs 15 billion in 2017-18 as compared to Rs 22 billion but released only Rs 10.165 billion. If the released amount is taken into account vis-à-vis allocation for 2017-18, allocation has increased by 47.5 per cent.
According to sources, since the Ministry of Water and Power has waived off Rs 47 billion of Sindh government with special effort of former Secretary Water and Power, Younas Dagha, Finance Ministry has demanded that the subsidy be returned by Sindh-based Discos, ie, Hyderabad Electric Supply Company (Hesco) and Sukkur Electric Supply Company (Sepco) claimed against the billing of Rs 47 billion.
Finance Ministry earmarked Rs 15 billion in the budget 2017-18 for power sector PSEs reforms which is a new heading in budget documents. Most of the officials of Water and Power Ministry are unaware of this new item. However, Joint Secretary Water and Power (Power Finance), Zargham Eshaq Khan told this scribe that there is no such program for power sector, adding that this amount may have been allocated to clear the stock of dues of AJ&K.
"Finance Ministry may have changed the title but the amount is meant to pick up Wapda/Pepco receivables from AJK," he added. The government had allocated only Rs 4 billion to pick up receivables from AJK during 2016-17 but the actual amount has reached Rs 80 billion and Water and Power Ministry is taking this issue at different forums.
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