ISLAMABAD: The federal government has budgeted an increase in subsidies by 62 percent, ie, from Rs 664 billion in budget 2022-23 to Rs 1.074 trillion in FY 2023-24.

However, the earmarked amount of subsidy is -2.6 percent - amounting to Rs 1.074 trillion for 2023-24 from revised amount of Rs 1.103 trillion during outgoing fiscal year - as subsidy on concessional electricity and RLNG to export-oriented sectors has been withdrawn as per the agreement with IMF.

According to budget documents, subsidy for power sector will increase to Rs 579.075 billion for FY 2023-24 from Rs 455 billion allocated for 2022-23, posting an increase of over 27 per cent.

For IPPs, an amount of Rs 310.075 billion has been earmarked in the budget against budgeted amount of Rs 180 billion for 2022-23, showing an increase of 72 per cent. However, no amount has been budgeted for TDC (FCA spillover, Kissan package and flood waiver despite the fact the government had allocated an amount of Rs 48 billion on this account in revised budget of 2022-23).

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For Inter-Discos tariff differential, an amount of Rs 225 billion has been earmarked in the budgeted amount of 2022-23 against allocations of Rs 184 billion for FY 2021-22 which is 21.6 per cent higher compared to outgoing fiscal year.

The government has budgeted Rs 25 billion for WAPAD/ PEPCO receivables – merged districts of KP (FATA subsidy against Rs 20 billion in budget 2022-23.

The budget documents further reveal that an amount of Rs 150 billion has been earmarked as Inter-Disco Tariff Differential in 2023-24 against Rs 225 billion in 2022-23, which is over 33 per cent less as compared to outgoing year.

The government has earmarked Rs 55 billion for AJ&K TDS in 2023-24 against budgeted Rs 3 billion in 2022-23 which was revised to Rs 75 billion. The government has also allocated Rs 25 billion on account of deficit for AJK against electricity revenue shortfall.

No amount has been earmarked for industrial support package, zero rated industrial subsidy and Agri tubewells Balochistan (non-recovery from consumers) despite the fact an amount of Rs 27 billion was allocated for 2022-23 which was later enhanced to Rs 129 billion.

For K-Electric, the government has earmarked Rs 315 billion for FY 2023-24 which is 294 per cent higher against budget amount of Rs 80 billion and 66 per cent against revised amount of Rs 193 billion. Of Rs 315 billion Rs 171 billion have been earmarked for KE’s tariff differential against budget amount of Rs 60 billion. However, allocation for FY 2023-24 is over one per cent to Rs 171 billion from revised amount of Rs 173 billion. An amount of Rs 7 billion has been budgeted for Industrial support package during 2023-24 against Rs 13 billion allocated for FY 2022-23.

The government has earmarked Rs 53.6 billion as subsidy for petroleum, against budgeted amount of Rs 71 billion which was revised Rs 102 billion in revised estimates. Of Rs 53.6 billion no amount is allocated for LNG sector for providing gas at lower rates to industry against Rs 40 billion allocated for FY 2022-23. However, an amount of Rs 12.6 billion has been earmarked for PSO, APL liabilities and others (shortfall in guaranteed through put to APL, PEPCO against Rs 6 billion for 2022-23).

An amount of Rs 30 billion has been earmarked for FY 2023-24 to supply RLNG to domestic consumers through SNGPL against Rs 25 billion for 2022-23. However, no amount has been allocated for exchange losses incurred by PSO on FE-25 loan and PDC claims (PM package) despite the fact Rs 31 billion were allocated on this account in revised estimates.

For Passco, Rs 10 billion have been earmarked for wheat operation and wheat reserved stock during FY 2023-24.

An amount of Rs 35 billion has been estimated for Utility Stores Corporation USC) operation during 2023-24 against Rs 17 billion budgeted for 2022-23 which was later on revised to Rs 30.027 billion. Of Rs 35 billion, Rs 5 billion are meant for Ramazan package and Rs 30 billion for USC (PM package).

For Passco, Rs 7 billion has earmarked for subsidy on account of wheat operations and wheat reserved stocks. The government has earmarked Rs 17 billion for USC in 2022-23, which is Rs 183 per cent higher than Rs 6 billion, of which Rs 5 billion will be for Ramazan package and Rs 12 billion as PM package.

An amount of Rs 49 billion has been earmarked for other budgeted subsidies of which Rs 10. 5 billion are for wheat subsidy to GB, Rs 2 billion Metro Bus, Rs 30 billion for fertilizer plant, Rs 500 million for Nya Pakistan Housing Authority, Rs 6 billion for import of urea.

An amount of Rs 32.6 billion has been budgeted as additional for flood of which Rs 12 billion for Mera Pakistan Mera Ghar Scheme (mark-up), Rs 5.7 billion markup subsidy to support phasing out of SBP’s refinancing facilities, Rs 7 billion for provision of subsidy for interest free loans for farmers in flood affected areas, Rs 6.4 billion for markup subsidy and risk sharing scheme for farm mechanization and Rs 1.3 billion for interest fee loan to landless farmers in flood affected areas.

Copyright Business Recorder, 2023

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