The government has provided Rs 119 billion subsidy to the power sector during the first three and half months of the current fiscal year against the total budgetary allocation of Rs 134 billion for the entire fiscal year, a senior Finance Ministry official said on Thursday.
The official said on condition of anonymity that Rs 95 billion have been provided to the power sector directly and Rs 24 billion were paid to the Independent Power Producers (IPPs) on behalf of power sector subsequent to the directives of the Supreme Court.
The official said that Rs 24 billion were provided to IPPs in three equal installments of Rs 8 billion provisional. According to the official, about 70 per cent of Coalition Support Fund (CSF) disbursement by the US in the current fiscal year amounting to $1.18 billion was utilised to provide subsidy to the power sector. He said that only 30 per cent of the CSF disbursement was utilised for productive purposes. Another official said that a subsidy of around Rs 25 billion was being provided to the power sector monthly and if the current pace of releases continued, it would have serious repercussion on the fiscal deficit, and subsidis may exceed well over Rs 300 billion by the end of the fiscal year.
Such a situation, analysts say, may compel the economic managers to make another one-off adjustment during the current fiscal year as well. The performance of power sector has deteriorated during the past four years with steady increase in losses and receivable of distribution companies. The Ministry of Water and Power recently conceded that receivables of distribution companies increased from Rs 187 billion in 2008 to Rs 402 billion in September this year, up by Rs 237.04 billion.