Subsidies for railways, power sector to swell allocation

It will be first time in Pakistan's budget history that the proposed subsidy of Rs 30 billion for Pakistan Railways to meet losses, as well as higher subsidy for the poorly performing power sector would increase the overall allocation on subsidies for 2018-19.
According to official sources, power sector's subsidy is proposed at around Rs 189 billion of which Rs 135 billion will be allocated for Tariff Differential Subsidy (TDS) for power Distribution Companies (Discos) including Rs 6 billion of GoP equity in Discos through PHPL for payment of DSL of STFF whereas K-Electric will get Rs 15 billion on this account. In 2017-18, a subsidy of Rs 65 billion was allocated for Discos as TDS and Rs 15.5 billion for K-Electric.
The government will also earmark Rs 12 billion for tariff differential for agriculture tube wells in Balochistan in 2018-19 against Rs 8.5 billion allocated for 2017-18. To pick up power sector's receivables against FATA, the government will earmark Rs 14 billion against Rs 10 billion allocated in 2017-18. The government has also agreed to allocate Rs 12.8 billion to clear a portion of arrears of around Rs 70 billion.
The proposed amount for subsidy for payment of sugar arrears for USC has been increased by 100 percent to Rs 3 billion in 2018-19 against Rs 1.5 billion for the current fiscal year. However, the amount of Ramazan package is not included in the proposed subsidies for the forthcoming fiscal year. USC will also receive Rs 1 billion to sell pulses at subsidized rates while in 2017-18, the amount allocated for this purpose was Rs 500 million, showing a 100 percent increase.
There is no change in subsidy to PASSCO on account of wheat supplied to Gilgit-Baltistan (arrears). The government will allocate Rs 2 billion for supporting sugar exports but no amount is expected to be earmarked for freight subsidy on sugar exports by TDAP like the current fiscal year.
The allocation for wheat export will be increased by Rs 500 million in 2018-19 to Rs 2 billion from Rs 1.5 billion for the current fiscal year.
The government has also indicated earmarking Rs 5 billion for urea import despite the fact that locally manufactured urea stocks are not only sufficient to meet domestic requirements but will also be a 100,000 tons surplus. However, no subsidy is proposed on urea or DAP fertilizers for the next fiscal year.
There is no mention of subsidy for wheat reserved stocks and wheat operations which is the responsibility of PASSCO, which procures wheat on behalf of the federal government.