The Econ-omic Coordination Committee (ECC) of the Cabinet has decided to defer a proposal of subsidy to agriculture tube-wells in Balochistan till a meeting is held between Prime Minister Imran Khan and Chief Minister Balochistan Jam Kamal Khan to resolve outstanding subsidy arrears.
Sources said that a proposal was submitted to the ECC meeting, presided over by Finance Minister Asad Umar, and according to it, earlier the subsidy to the agriculture consumers was provided from fiscal year 2001-02 to fiscal year 2009-10. Despite having financial constraints, the subsidy was restored in pursuance of ECC decision dated 22.11.2012 for the period of two years from 01.12.2012, but without clarification/ fate of intervening period i.e. from 1.7.2010 to 30.11.2012.
The stakeholders, however, did not discharge their liabilities and Rs 54.636 billion is still outstanding against the stakeholders by end-December 2014. The committee constituted by the Cabinet Committee on Energy (CCE) in 2015 on recovery of receivables and addressing the issue of circular debt in its meetings held on 9.2.2015 and 25.2.2015 agreed to fix the subsidy for the intervening period, i.e., from July 2010 to November 2012 as per subsidy package already approved by the ECC of the Cabinet on 22.11.2012. As per decision, the share of tube-well owner was fixed at Rs 6,000 per month while the federal and provincial governments shares at the rate of 40% and 60%, respectively.
The ECC was informed that of the remaining amount of bill after deduction of the tube-well owner's share was subject to a maximum of Rs 44,000 per month. In case, the bill exceeds Rs 500,000, the amount over and above would be paid by the tube-wells owner.
As per the above formula, the subsidy share receivables for intervening period, i.e., after withdrawal of subsidy from July 2010 to November 2012, the payment formula as per committee's recommendations was federal government's share @ 40% (Rs 21.127 billion), provincial government's share @ 60% (Rs 31.690 billion), and consumer share @ Rs 6000+above Rs 50,000 non-subsidised (Rs 1.819 billion). The total amount stood at Rs.54.636 billion.
Agriculture being major source of livelihood in Balochistan and in order to bring the farming community at par with other farming communities of the country, it was decided in the budget 2017-18, that the federal government will pay a portion of their electricity bills to run agriculture tube-wells and continue to provide electricity subsidies on tube-wells in Balochistan.
In view of the above, Power Division solicits consideration of the ECC of the Cabinet proposed; (i) continue the subsidy for agriculture consumers for a further period of two years from 1.1.2018 to 31.12.2019 subject to commitment of past payments by all concerned/ stakeholders on same terms and conditions as approved by the ECC of the Cabinet vide case No. 101/12/2015 dated 17.6.2015; (ii) alternative Energy Development Board in collaboration with the government of Balochistan will work expeditiously on solarisation of agriculture tube-wells and drip irrigation system in Balochistan. The government of Balochistan may extend full legal and law enforcement agencies cooperation for recovery efforts being made by QESCO from the electricity defaulters especially from the agriculture consumers; (iii) receivables for intervening period i.e. after withdrawal of subsidy from July 2010 to November 2012 will be made in accordance to the payment formula recommended by the Cabinet Committee on Energy (CCE) vide case No. 4/1/2015 as narrated at para 5 ante; (iv) and the ECC of the Cabinet may decide subsidy amount on the basis of average load/ motor size for agriculture consumers as per different options.
The ECC was further told that it is with great reluctance that the Power Division would consider extension of current subsidy scheme in view of outstanding liabilities and the existing financial crunch to the power sector. The Finance Division has to make firm commitment to clear the outstanding subsidy arrears, besides streamlining the subsidy payment process.