ISLAMABAD: The federal government has reduced subsidy for power sector by 13 percent to Rs 1.036 trillion for FY 2025-26 from Rs 1.190 trillion for FY 2024-25.
According to federal budget documents, total subsidies decreased by 14 percent – from the revised estimates of Rs 1.378.489 trillion for FY 2024-25 to Rs 1.186.036 trillion for FY 2025-26.
The amount of subsidy for Inter-Disco tariff differential has been slashed to Rs 249.136 billion for 2025-26 from allocation of Rs 276 billion for FY 2024-25, showing a reduction of 9.8 per cent. Subsidy for tariff differential to agritubewells in Balochistan will be Rs 4 billion in 2025-26 from Rs 9.5 billion in 2024-25.
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The amount of subsidies for merged districts of KP erstwhile FATA has been reduced over 38 per cent to Rs 40 billion for FY 2025-26 from Rs 65 billion for FY 2024-25.
The government has also slashed the amount of subsidy for AJK by 31.5 per cent to Rs 74 billion for 2025-26 from Rs 108 billion for FY 2024-25. The amount under Pakistan Energy Resolving Fund (PERA) will remain at Rs 48 billion for FY 2025-26 like FY 2024-25. This amount is meant to pay Rs 5 billion every month to Chinese IPPs established under China Pakistan Economic Corridor (CPEC).
For K-Electric, the amount of subsidy has been reduced over 28 per cent to Rs 125 billion for FY 2025-26 from Rs 174 for the FY 2024-25, however, Rs 1 billion have been allocated as subsidy for agriculture tubewells in Balochistan for FY 2025-26 against Rs 500 million for FY 2024-25. The government budgeted Rs 95 billion to IPPs in FY 2025-26 against Rs 115 billion in revised estimates for the FY 2024-25, which implies that no amount had been allocated on the account at the time of announcement of budget 2024-25.
And allocated Rs 400 billion subsidy for 2025-26 under the head of lump sum provision for power subsidy against revised Rs394 billion and actual allocation of Rs 509 billion for 2023-24. The purpose of this allocation has not been mentioned in the budget documents.
The government earmarked Rs 1.200 billion as subsidy for petroleum for FY 2025-26, against budgeted amount of Rs 18.400 billion in 2023-24, of which Rs 1,200 billion will be as shortfall in guaranteed throughout of PEPCO, against Rs 2,400 billion for FY 2024-25. However, no amount has been allocated to meet shortfall to Asia Petroleum and domestic consumers through SNGPL (RLNG). For FY 2024-25, an amount of Rs 16 billion had been earmarked on these accounts.
For Passco, Rs 20 billion have been earmarked for wheat reserve stock during FY 2025-26, of which Rs 14 billion will be meant for wheat reserve stock and Rs 6 billion for cost differential for sale of wheat in 2025-26.
An amount of Rs 24 billion has been estimated for Industries and Production for FY 2025-26 against Rs 68 billion for FY 2024-25. Of this, Rs 9 billion has been earmarked for subsidy-incentive on electric vehicle scheme and Rs 15 billion for USC sugar subsidy/arrears. No amount has been allocated for PM’s USC package and Ramzan package for 2025-26 though Rs 55 billion had been earmarked for FY 2024-25.
The amount of subsidy under the head of other subsidies has been earmarked at Rs 104.7 billion for 2025-26 against actual allocation of Rs 75.012 billion and revised allocation of Rs 90.099 billion.
Details of total amount of Rs 75.012 billion for other subsidies are as follows: (i) wheat to Gilgit Baltistan, Rs 20 billion;(ii) subsidy on import of urea fertilizer, Rs 15 billion; (iii) subsidy on NAYA Pakistan Housing Society, Rs 1 billion; (iv)mark-up subsidy and risk sharing scheme for farm mechanization/Kissan package, Rs7 billion; (vi) refinance and credit guaranteed scheme (SME Asaan Finance) Rs1 billion; (vii) subsidy for enhancing financing to SME sector Rs 2 billion; (viii) markup subsidy to support phasing out of the SBP’s refinancing scheme, Rs 30 billion (ix) provision of 5 kms radius gas scheme Rs 5 billion; (x) EFS enhanced plan-Exim and related scheme Rs 5 billion; (xii) (markup subsidy on low cost housing Rs 5 billion; and (xiii) Metro Bus subsidy Rs 7.300 billion.
Copyright Business Recorder, 2025
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