Power tariff cut for agriculture sector: effective mechanism required to ensure trickle-down effect

The government's decision to reduce electricity tariff by Rs 3.50 per unit for agriculture sector would not help lower the cost of production until the government devises an effective mechanism to trickle-down the effect of the package to small farmers.
A senior official of Ministry of National Food Security and Research (MNFS&R) on condition anonymity said that the reduction in power tariff notified by Ministry of Water and Power is part of the Prime Minister's Agriculture Package but it would only benefit progressive farmers who have installed their own tube-wells; and not give any relief to small farmers who buy water from tube-well owners for irrigation purposes.
"The government should formulate a policy to force tube-well owners to reduce the rates of agriculture water to provide relief to small farmers," he said.
He added that currently, there is no law to compel tube-well owners to decrease rates of agriculture water following a reduction in electricity tariff for agriculture tube-wells.
Mian Muhammad Umair Masood, secretary general Pakistan Kisaan Ittehad (PKI) while talking to Business Recorder said that currently, tube-well owners sell water to farmers at Rs 400 to 450 per hour and if the package announced by the government is properly implemented, it would decrease water rates by up to Rs 150 per hour, which will reduce cost of production.
He said that the PKI has written a letter to the government, requesting that the agriculture extension departments be directed to ensure reduction in water rates following cut in electricity tariff for agriculture sector. He said that the PKI would also make an announcement in mosques regarding new rates of tube-well water.
Muhammad Tahir Anwar, Director General (DG) Federal Water Management Cell (FWMC), an attached department of MNFS&R, said that the package will benefit 17 percent tube-well owners as only 17 percent tube-wells in the country operate through electricity and 87 percent are on diesel. He also said that currently, there is no regulation to force tube-well owners to reduce water rates after decrease in electricity tariff.
However, he said that the MNFS&R has recommended to the government to formulate a regulatory framework for sustainable use of ground water as well as to regulate rates of tube-well water.
He said that the reduced power tariff will be available to the agriculture sector throughout the country except Balochistan as Quetta Electric Supply Company (QESCO) is already charging agriculture tube-well owners a flat rate.
According to a notification, power consumers in the agriculture sector will now be charged Rs 5.35 per unit in off peak hours against the previous rate of Rs8.85 per unit.
However, there will be no change in the peak hour per unit rate and it will remain Rs10.35 per unit.
The notification further says that the difference between National Electric Power Regulatory Authority's (NEPRA) tariff and subsidised tariff for peak and off peak hours will be budgeted as tariff differential subsidy would be borne by the federal government.
Rs10.35/unit will continue to be the rate during peak hours ie (from 6pm to 10pm in winter and from 5pm to 11pm in summer); agriculture tube-wells will not be entitled to the power supply, while General Sales Tax (GST) will be paid by the respective provincial governments.
In case of non-payment of GST by a provincial government, the consumers of the respective distribution company will be charged for GST in addition to the agreed fixed rates.
The notification also states that in case of positive adjustment, Fuel Price Adjustment (FPA) will be picked up by the federal government.
This facility will be passed on to those agriculture tube-well owners who have settled their outstanding dues with their respective DISCOs either through complete payment or agreed installments.