ISLAMABAD: Power Division has reportedly decided to discontinue subsidy to five export-oriented sectors beyond May 31, 2022 if Commerce Ministry does not arrange additional amount of Rs 32 billion for the remaining months of current fiscal year, sources close to Secretary Commerce told Business Recorder.
Sharing the details, the sources said, on August 31, 2021 Ministry of Commerce (Textile Wing) wrote a letter to Power Division wherein ECC of the Cabinet decision of August 16, 2021 was communicated on summary titled “continuation of concessional rates of electricity and RLNG to export-oriented sectors for implementation.”
The ECC took the following decisions: (i) electricity may be provided at US cents 9 per kWh all-inclusive to export-oriented sectors namely textiles including jute, leather, carpet, surgical, and sports goods during financial year 2021-22; and (ii) Finance Division may give financial commitment that additional funds if required by Power Division and Petroleum Division shall be provided to continue concessional energy rates to export-oriented sectors. However, Ministry of Energy may apprise relevant Ministries regarding the budgetary situation in time so that Commerce Division may place a summary for supplementary grant allocation before ECC for consideration.
According to the sources, Power Division has apprised that the Subsidy Cell of Power Division has conveyed that Rs. 24.948 billion has already been disbursed to the zero-rated industrial consumers till Feb- 2022 claims against the budgetary allocation of an amount of Rs 26 billon; whereas K-Electric’s zero-rated industrial subsidy claims amounting to Rs 4.61 billion are still under the verification process. Further, owing to the increase in the industrial tariff besides the number of zero-rated industrial consumers, the Subsidy Cell has received Rs. 7.26 billion zero-rated subsidy claims for the month of March 2022, which are also under a verification process.
Load-shedding challenge: Rs329bn is needed: Power Division
Power Division maintains that incremental subsidy trend depicts that the allocated subsidy amount would not be sufficient for the remaining period of the current FY 2021-22. Consequently, it is estimated that an additional Rs. 32 billion would be required to continue concessional energy rates to the zero-rated industrial consumers till the end of current FY 2021-22.
According to the sources, pursuant to the ECC of the Cabinet decision, Power Division has requested Ministry of Commerce to approach Finance Division for obtaining a Supplementary Grant amounting to Rs. 32 billon for the continuation of concessional energy rates to the zero-rated industrial consumers till the end of current FY 2021-22.
Power Division, the sources said, argues that owing to severe financial constraints, it is not in the position to sustain the subsidy implications and subsequent continuation of the concessional energy rates to the zero-rated industrial consumer beyond May 31, 2022, if additional funds amounting to Rs. 32 billion are not provided. Therefore, the Commerce Division has requested to arrange a supplementary grant amounting to Rs. 32 billion or otherwise the zero-rated industrial consumers will be billed in accordance with the applicable industrial tariff as notified by the GoP.
Copyright Business Recorder, 2022
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