World Bank Resident Head John Wall has said that the government would give over Rs 60 billion subsidy to the power sector in the ongoing fiscal year. The higher amount of subsidy would be due to lower production of hydel power and higher furnace oil rates in international market. He was talking to journalists after attending a seminar on cost of doing business.
He said that power sector has improved a lot in the last ten years but technical losses could be reduced by introducing new investment in the sector. Nepra has played a key role in improving the electricity sector finances, he added.
Total subsidies given by the government in the budget 2004-05 were Rs 54 billion, which would have to be largely improved after increase in international oil prices. The government was expecting to consume Rs 70 billion losses on account of increase in oil prices not transferred to masses.
Due to the mismatch of revenue and expenditure position of Wapda's Discos, a loss of Rs 68 billion has emerged as per calculations made by National Electric Power Regulatory Authority. The Bank and the regulatory authority are working to find ways to match the position.
The losses in energy sector of the government make up to almost 1 to 1.1 percent of GDP of the country. The government has been unable to reduce these losses over years.
Three electricity supply companies including Peshawar Electricity Supply Company (Pesco) and Multan Electricity Supply Company are incurring large losses.