ISLAMABAD: The government has decided to revise the subsidy of Karachi Electric Supply Company (KESC) to Rs 60 billion from Rs 24.588 billion allocated in the federal budget for 2011-12, sources told Business Recorder. According to budget documents, the Finance Ministry had earmarked Rs 3.317 billion as subsidy to KESC in 2010-11, which was later revised to Rs 47.317 billion, of which Rs 46 billion was meant to be picked up as tariff differential.
This year, the Finance Ministry repeated last year's exercise and allocated only Rs 24 billion for tariff differential. However, when the only privatised power generation and distribution company--KESC--reduced power generation due to reduction in gas supply and non-availability of furnace oil, the federal government dispatched its team, led by Minister for Petroleum and Natural Resources, Dr Asim Hussain, to resolve the issue.
During the meeting between the government team and KESC management, it was clarified that the amount allocated in the budget was far less than the amount agreed in the pact signed at the time of privatisation. After detailed deliberations, the government enhanced the amount of subsidy from Rs 24 billion to Rs 60 billion for the current fiscal year.
The team also restored gas supply to thermal power plants of KESC to ensure power supply to the consumers. The National Electric Power Regulatory Authority (Nepra) has sought clarification from KESC for not supplying power to consumers when monthly fuel adjustment, being given to the company, is as per the procedure.
KESC had sought permission to bill the consumers on average use on the pretext that law and order situation did not allow its staff to check electricity meters. The Finance Ministry has claimed that overall reforms are based on better governance, supportive legislative framework, financial measures, supply side intervention, demand side management and recovery measures.
Budget strategy paper also disclosed that Pakistan's development partners are providing support to the government to address the electricity issue through technical and financial assistance including the Asian Development Bank, World Bank and United States Agency for International Development (USAID). According to the Finance Ministry, the issue of inter-circular debt would improve with the expectation of picking up of unpaid subsidy amount after reconciliation of financial year 2010. It is pertinent to mention here that the International Monetary Fund (IMF) had urged the government on several occasions to slash untargeted subsidies.
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